UK shop price deflation remains low as electricals category dips 5.4%

Overall prices of goods in UK retailers fell by 1.9 per cent in April, with deflation in the electricals category reaching 5.4 per cent.

While deflation in electricals did slow for the third consecutive month, falling from 5.7 per cent in March, it hasn’t been lower since August 2014. The drop was driven by the household appliances category which reported a sharp deceleration in its deflation rate, with deflation in the audio and visual equipment sector too.

According to the BRC-Nielsen Shop Price Index (SPI), overall shop price deflation in the UK remains in line with the three-month average and above the six-month average of 1.7 per cent. Both food and non-food prices remained lower than they were a year ago, the latter reporting its 25th consecutive month of deflation.

Furthermore, the Consumer Price Index, the UK’s headline rate of inflation, was widely expected to fall into deflation in March, however it held its ground at zero for the second consecutive month.

Consumer Confidence as measured by GfK was unchanged at +4 in April, which has widely been seen as positive against the backdrop of an uncertain outcome in tomorrow’s General Election.

"Whatever the outcome is, confidence is in a much better place than it was five years ago, when it was a staggering 20 points lower. The purchasing power of consumers is likely to improve further in the coming months with real incomes rising and healthy conditions in the labour market likely to boost household spending this year. Retailers will be doing all they can to help consumers budgets go further," said the Thomson Reuters/CoreCommodity CRB Index in a statement.

BRC Director General, Helen Dickinson, said: “Prices in Britain’s shops continue to fall, this month by 1.9 per cent. The falling prices of non-food goods slowed down very slightly, whilst offering up great deals in clothing, electricals, books, stationery, home entertainment, DIY, gardening and hardware.

"April saw the 24th consecutive month of falling shop prices and the 25th consecutive month of falling non-food prices. These trends help to illustrate how retail has helped the consumer keep the cost of living down in recent years. 

Mike Watkins, Head of Retailer and Business Insight at Nielsen, added: “The challenge for retailers is that despite consumer confidence being back to pre-recession levels, many households are still cautious about spending, and for those with more disposable income, some appear to be spending a little more outside of retail, for example on leisure and entertainment. So we anticipate promotions continuing over the summer months to help the momentum in retail sales.”

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