Daily Management Review

Cautious Customers Force The Shop Prices To Remain Low


06/10/2016


The analysts study the prices hovering within the deflation zone.



The deflation related to shop price went up to “1.8%” in the month of May 2016, while in the previous month of April 2016, the same had fallen to “1.7%”, reported the “BRC-Nielsen shop price index”.
 
On the other hand, non-food deflation rate touched bay at “2.7%” from its previous month’s stance of “2.9%”, while the food sector went back within the “deflationary territory” whereby coming down to “-0.3%” in a continuous fluctuation which hovers around the “zero mark”.
 
Moreover, within the food sector, the fresh food saw an accelerated “deflation rate” coming to “0.8%”, which can be compared to “the deepest deflation rate last year”. British Retail Consortium’s Chief Executive, Helen Dickinson, stated:
“The fact that today’s figures remain deflationary doesn’t come as a great surprise. We’ve experienced a record run of falling shop prices and, for the time being, there’s little to suggest that’ll end any time soon – so the good news for consumers continues."
"We would normally expect these input costs to filter through to prices eventually, but the big question is how far fierce competition in the industry will insulate consumers from price increases. If retailers do continue to absorb these costs it’ll be more important than ever that other external costs, business rates chief among them, are brought under control.”
 
In addition, Mike Watkins from Nielsen informs that shoppers are “becoming” more cautious in the way they spend, therefore retailers need to maintain the “non-food prices” either same or may be lower further in the coming six months.
 
Clive Black from ShoreCap writes:
"The deflation in the system rests alongside wages and salaries that are rising ahead of prices, as manifested in the ONS data and the Asda Income Tracker”.
"Whilst this is so, there appears to be caution amongst many consumers reflected in easing GfK NOP consumer confidence data in recent times, mirroring slowing macro-economic data in the UK and perhaps the political circus that is the EU referendum. With the latter three weeks away, maybe the circus acts will go back to their cages and life will return to something resembling a little more normality, so improving the consumer mood with uncertainty removed."
 
Looking in to the near future, he also adds that there are chances of better income given the upcoming celebrations like “the Queen's 90th birthday celebrations, the UEFA football extravaganza in three of the four home markets and the Rio Olympics”.
 
 
 
 
 
 
 
 
 
 
References:
http://www.digitallook.com/







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