For the sixth month in a row, the prices in UK shops fell in October despite the seemingly positive economic outlook, which has been met by reduced spending by UK consumers. There was a 0.5% reduction in UK shop prices, up from 0.2%, that was registered in September according to the British Retail Consortium.
The inflation on food products stood at 2.7% in October, an improvement from September, which recorded 2.9%. For non-food products, there was an annual deflation rate of 2.4% in October unlike 2.0% that was recorded in September.
According to Helen Dickinson, the director at BRC, October saw the greatest deflation rate since they started doing the survey, which also saw the inflation rate hit the record low that is equal to the record set by July-August. The decline in prices of non-food items could be attributed to increased promotions on clothing.
The many offers on super Thursday could also be a contributing factor according to Dickinson. The strong pre-Christmas demand for games and gadgets has seen retailers trying to outcompete each other, a trend that has seen the value of electricals decline.
She also stated that the decrease in inflation for food items can be attributed to reduced product prices for ambient goods coupled with considerably stable fresh produce prices.
The UK has been greatly affected the by the Eurozone financial crisis with the economy and the retail sector being some of the worst hit.
This has been contributed by the widespread austerity measures coupled with minimal wage growth, which has reduced consumer’s disposable income. Experts have showed their concern on the consumer’s reluctance to spend despite seemingly positive economic outlook.
The head of retail and business insight at Nielsen, Mike Watkins said that people are either unwilling, reluctant or unable to increase their spending despite the positive economic growth. This explains why retailers have had to put in place attractive offers meant to trigger demand, which is why there has been reduced shop price inflation and reduced inflation on prices of non-food items.