Posted Thursday

Furniture sales drive shop price inflation in May

By KBBDaily on 13th June 2019 - 08:00am
money matters, brc, british retail consortium, nielsen, shop, price, index, deflation, non-food, kbb, kbbdaily, retail

Growth in non-food sector prices including furniture has driven overall shop price inflation in May, according to the latest British Retail Consortium – BRC – Nielsen Shop Price Index, with inflation accelerating to 0.8% compared with the 0.4% recorded in April.

Non-food prices increased last month by 0.2% – a marked increase from the 0.6% decrease in April. The BRC noted that this is the second month of non-food inflation in 2019, in contrast to the past six years of deflation for the sector.

Furniture retailers drove inflation in shop prices in May by adjusting their prices to their 2015/2016 levels “following a couple of years of deep discounts”, the BRC said, noting that furniture prices last month were 6.5% higher than May 2018 but only 0.5% higher than May 2015.

However, the BRC noted that “deep deflation” in other categories – including electricals – has put “downward pressure” on non-food prices. The organisation added that “weak consumer spend on discretionary items is likely to continue to keep a lid on any significant price increases”.

“The price rises in some non-food categories, such as furniture and health and beauty, follow years of deep discounting, while other areas, such as electrical and clothing, have seen greater technological disruption and more intense competition, putting downwards pressures on prices,” said BRC CEO Helen Dickinson.

“Rising costs associated with currency depreciation, stockpiling, rising minimum wage and the Apprenticeship Levy, have all put upwards pressure on prices for a while, and it now appears that retailers cannot absorb them any longer. Unless the Government addresses future cost rises, including spiralling business rates, we may see larger price rises in the future.”

Nielsen retailer and business insight head Mike Watkins noted: “Inflation has returned to non-food but consumers remain cautious and there is intense competition on the high street. With non-food retailers facing uncertain levels of demand, price discounting could quickly return if demand weakens over the next few months.”

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