Responding to the latest CPI inflation figures, which show headline inflation falling to 3.0% and food inflation falling to 3.6%, Harvir Dhillon, Economist at the British Retail Consortium, said:
Headline inflation stood at 3.0% in January, driven partly by food inflation easing to 3.6%, offering some relief for struggling households. Shoppers will have been pleased to see the price of clothing, footwear and furniture dropping significantly on the month as a result of heavy discounting by retailers during the January sales. And there was further good news for customers as staples such as bread, cereals and rice all fell in price on the month.
This improvement reflects intense competition between retailers, who continue to try and absorb higher costs wherever possible to keep prices down for customers. However, margins remain razor thin and the cumulative burden of taxation and regulation on consumer-facing industries is rising. Retailers continue to face high labour costs, and the additional complexity associated with the Employment Rights Act risks adding to existing pressures. Without careful implementation, retailers’ ability to shield customers from higher prices, as well as to invest and create jobs, will be limited.
