Mild inflation is back, but fashion retail continues to struggle

Mild inflation has returned to the UK, with shop prices rising in November for only the third time in the last five years. But this isn't good news for everyone, with increases in food prices accelerating deflation in non-food retail categories, including fashion, according to BRC and Nielsen’s latest ‘Shop Price Index’.

While low fashion price tags might look good for UK shoppers in the build up to Christmas, the low inflation looks bleak for many UK retailers who continue to keep prices low in order to compete with the ever-growing reach of online shopping, as well as weaker consumer spending and confidence.

Overall prices rose by 0.1 percent year-on-year, driven by food inflation, which accelerated to 1.6 percent in November, from 1.3 percent in October.

Fashion retailers struggle as price tags remain low

Helen Dickinson OBE, Chief Executive, British Retail Consortium, said in a statement: “As we approach the Christmas season, the good news for consumers is that prices have remained almost unchanged in November.

“However, the low inflation presents a more difficult picture for retailers who are facing weak consumer demand and uncertainty surrounding Brexit. If the Government wishes to rebuild business confidence, they must work fast to ensure we get a transition period that gives retailers and their suppliers time to adapt to business outside the EU.”

Mike Watkins, Head of Retailer and Business Insight, Nielsen, added: “Whilst there has been a small increase in retail prices since the end of the summer, shop price inflation remains below CPI. Prices continue to fall in non-food as shoppers are still cautious about spending.

“We have also seen deeper promotions ahead of Black Friday and the wider benefits from membership schemes also being messaged to shoppers. With the recent slowdown in sales growth across food retailing and the start of seasonal advertising, we can expect further price cuts as the battle for shopper loyalty this Christmas begins to heat up.”

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