UK shop prices have continued on a downward trend in January, but food prices picked up following Christmas promotions.
Overall shop prices reduced 0.3% year on year, according to data from the BRC-Nielsen Shop Price Index covering the period from 6 to 10 January.
This was below the 12-month average of 0% but above the six-month average decrease of 0.5%. In December, prices had fallen 0.4%.
Non-food prices dragged the ongoing decline, falling 1.5% in January amid a raft of discounting on the high street.
“Shoppers will cheer as non-food prices fell in January, a continuation of the long-term trend in retail,” said BRC CEO Helen Dickinson.
Food prices however bucked the trend, accelerating 1.6% in January, up from 1.4% in December.
Fresh food inflation eased to 0.7%, but ambient food prices jumped to 2.8% from 2.4% the prior month, their highest inflation rate since April 2019.
Dickinson noted grocery prices “could rise further” driven by last year’s increase in global food prices coming on to British shelves.
“Nonetheless, food prices remain low by European standards,” she added.
Mike Watkins, head of retailer and business insight at Nielsen, said: “Whilst promotions in supermarkets have returned to more normal levels post-Christmas, the sector remains embattled with fierce price competition which looks set to continue.
“And after a decline in volumes across food retailing last year, the industry will be looking to stabilise sales in the first quarter.”
The FTSE 100 opened 0.2% higher at 7,491.63pts.
Yesterday in the City
The FTSE 100 ended the day in the green, up 0.9% to 7,480.69p after it recovered some of the heavy losses recorded at the start of the week.
Among the risers AG Barr (BAG) closed 15% higher trading at 629p after posting an upbeat trading update. Just Eat (JE) closed up 1.9% at 872.20p after announcing a deal to deliver McDonald’s in the UK and Ireland.