UK : London Shop Price inflation shows slight fall

Year-on-Year: In December the Shop Price Index (SPI) for London showed that prices were 2.9% higher than a year ago. Shop price inflation was only marginally lower than last month when prices rose 3.0% year-on-year.
The non-food sector still has a high level of promotional activity, with many retailers reducing prices earlier than usual. However, this continues to be outweighed by the high level of inflation seen in food prices, despite increased promotional activity.
Month-on-Month: Shop prices rose 0.4% between November and December compared to 0.2% between October and November. The increased rate of inflation is due to a reduction in the amount of discounting taking place in non-food compared to November.
Kevin Hawkins, Director General, LRC comments:
“With customers strapped for cash, retailers in London started discounting earlier than usual in December. Much of the discounting came from retailers selling big ticket items, like furniture.
There are still inflationary pressures from food, which dampened the promotional activity within that sector. And with consumers facing higher energy and mortgage costs, the Bank of England should cut rates again to provide a much needed to boost to consumers and retailers alike.”
Mike Watkins, Senior Manager, Retailer Services, Nielsen comments:
“Whilst the unprecedented levels of discounting during 2007 may have given some short-term sales boosts to London high street retailers, consumer demand continues to weaken and any underlying price inflation will only make it more difficult to entice shoppers to spend.“