Coronavirus: Shop prices fall at fastest rate in 14 years as retailers try to survive | Business News

Retail prices last month suffered their biggest monthly drop since 2006, according to the latest data.

Clothing and furniture retailers were among those discounting heavily in an effort to attract shoppers and survive the coronavirus crisis.

The pandemic forced non-essential shops to close in March in an effort to limit the spread of the virus, although many have been able to operate online.

For most, the restrictions are set to be eased on 15 June.

The BRC-Nielsen shop price index for May showed that prices slid by 2.4% in May, following April’s 1.7% decline.

Helen Dickinson, chief executive of the British Retail Consortium, said: “Shop prices in May fell at their fastest rate since 2006, which was largely driven by the drop in non-food prices.

“Clothing and furniture saw the biggest drop as retailers ran promotions to encourage consumer spending and attempted to mitigate recent losses.”

Non-food prices fell by 4.6% in May – the sharpest decline since December 2006 – compared to a fall of 3.7% in April.

Meanwhile, food inflation eased to 1.5% from the 1.8% increase in April.

Fresh food prices were up 0.5% from a 1% increase in the previous month.

Ms Dickinson added: “Year-on-year food prices increased slightly due to higher business costs, implementing social distancing measures and the upward pressure from labour shortages, but were down on the previous month as more home-grown produce became available.

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“We expect to see continued upward pressure on food prices from the effects of the pandemic in the coming months, while non-food prices are likely to remain deflationary with subdued sales.”

Mike Watkins, head of retailer and business insight at Nielsen, said: “With the retail industry coping with store closures and social distancing limitations, it’s no surprise to see shop price inflation slowing in recent weeks.

“Across the major supermarkets with sales growths in high single digits in May, the consumer spend on promotions has also been at an all-time low, but there has been little upwards pressure on prices.

“However, as we move towards summer with the importance of seasonal foods and with the supply chain still disrupted, we can anticipate some volatility in prices.”

This week until Thursday, Dermot Murnaghan will be hosting After the Pandemic: Our New World – a series of special live programmes about what our world will be like once the pandemic is over.

We’ll be joined by some of the biggest names from the worlds of culture, politics, economics, science and technology. If you’d like to be in our virtual audience – from your own home – and put questions to the experts, email [email protected]

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