Deflation stalks the high street

Retailers contribute to inflation through their pricing of a range of commonly bought goods

Data suggests shop prices fell 1.8% in September

Deflation stalks the high street

Deflation stalks the high street

Overall shop prices reported deflation for the seventeenth consecutive month, accelerating to 1.8% in September from 1.6% in August, according to the latest figures from the BRC-Nielsen Shop Price Index.

In addition, food inflation remained at 0.3% in September – equalling the lowest ever recorded.

Fresh food inflation was flat for September; this is the first month since Feb 2010 that the category hasn’t experience inflation.

Non-food reported an acceleration in deflation of 3.2% in September from 2.9% in August.

Helen Dickinson, British Retail Consortium DirectorGeneral, said: “The seventeenth consecutive month of deflation is good news for hard-pressed households. Retailers are turning their attention to Christmas by reading current conditions and matching consumer sentiment well with their promotions and offers.

“In particular, food inflation remained at an all-time low. In September, over a third of all groceries going through the tills were on some sort of promotion or special offer, meaning savvyshoppers are picking the deals that work best for them – allowing them to effectively budget. Fresh food prices remained flat – something not seen since February2010 – which will help those struggling in the current economic climate, including the country’s least affluent 30% who spend as much as 16% of their income on food and non-alcoholic goods. Non-food prices fell significantly, mainly fuelled by great bargains in furniture, flooring and electricals as increased activity in the housing market supported robust sales.

“Consumers can take heart that the outlook for inflation remains modest. Falling commodity prices, the strengthening of sterling, benign pressure in the supplychain and, critically,fierce competition across the retail industry suggests lower shop prices for consumers will continue.”

Mike Watkins, head of Retailer and Business Insight, Nielsen, said: “There are historic low levels of price increases across the high street, and with more price cuts expected from supermarkets over the next few weeks shoppers will continue to get great savings. Whilst sales patterns are still difficult to predict not least following the unusually warm late summer, we can anticipate a continuation of the current lowlevels inflation and even deflation for the rest of the year. This will help shoppers to plan their spending in the run up to the start of Christmas trading.”

 Methodology

The Shop Price Index (SPI) is administered by Nielsen, who collate and analyse the data on behalf of the BRC.

The index provides an indicator of the direction of price changes in retail outlets. The BRC launched the Shop Price Index to give an accurate picture of the inflation rate of 500 of the most commonly bought high street products in stores.

As the Index is designed to reflect changes in shop prices, the sampling points chosen are five large urban areas, spread nationally.  Not all sample stores are in city centres; they have been selected to reflect local shopping habits.  Therefore, the sample includes superstores on out-of-town sites, town centre department stores, local parade stores, and shopping centres. In each location, Nielsen collect and process the data for the BRC, visit stores of differing types, e.g. grocery, confectionery, DIY, department stores – including small and large multiples and independents. Data collection is monthly and always in the same stores to maintain consistency.

The items for which prices are collected reflect standard consumer purchasing patterns in terms of branded/own label split and price distribution.  The Index is constructed of seven main sectors of purchase: food, DIY, gardening and hardware, furniture, books, stationery and home entertainment, electrical, clothing and footwear, and other non-food. In total there are 500 items representing the seven main sectors, there are around 6,500-7,000 price points collected each period. Each product class category has an individual weighting based on the “All households” expenditure measured in the Family Expenditure Survey.  This data is also used to weight the Office for National Statistics Retail Price Index (RPI).

Although it is a proxy measure of inflation, the Shop Price Index is more focused than the Retail Price Index, and demonstrates the extent to which retailers contribute to inflation through their pricing of a range of commonly bought goods.

Deflation & Equity Release

What Is Equity Release?

Equity release is the use of financial arrangements that provide the owner of a house, or other property, with funds derived from the value of the property while enabling them to continue using it.

How Does Equity Release Work?

Equity release is aimed at homeowners aged 55 and over. It allows you to take some of the value of your home as cash.

Private Equity Release as a direct Investment

The private equity (PE) industry is comprised of institutional investors such as pension funds, and large private equity (PE) firms funded by accredited investors. Because private equity (PE) entails direct investment—often to gain influence or control over a company’s operations—a significant capital outlay is required, which is why funds with deep pockets dominate the industry.

Editorial Note: This content has been independently collected by the EveryInvestor advisor team and is offered on a non-advised basis. EveryInvestor may earn a commission on sales made from partner links on this page, but that doesn’t affect our editors’ opinions or evaluations. Learn more about our editorial guidelines.
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