Shopping crowd

The BRC-Nielsen shop prices index today reported the first deflation in three and a half years.

Overall shop prices fell by 0.1 in May, following a 0.4% rise in April, new figures have revealed.

The BRC-Nielsen shop prices index today reported the first deflation in three and a half years. The news follows figures on Tuesday that showed UK retail sales grew 1.8% in May on a like-for-like basis.

“Shop prices fell in May, the first time our measure has shown deflation for over three and a half years,” said the BRC’s director general Helen Dickinson.

“It bears out yesterday’s sales figures, which showed that retailers used a range of promotions and offers to drive demand and shift seasonal stock which didn’t sell well during the prolonged cold snap earlier in spring.”

Food inflation ran at 2.4% in May, down from 2.9% in April. Non-food goods showed an annual deflation of 1.5% in May following a 1% drop in April.

“Times remain tough, but it seems that retailers are reading the market well and doing what they can to offer customers the best possible value on their shopping,” Dickinson added.

Tesco is one major retailer feeling the pinch in the non-food sector: announcing its first-quarter results today, CEO Philip Clarke signalled it would make an “active retreat” from areas such as consumer electronics to concentrate on food.