Prices are falling but don’t expect it to last

Retail prices have been falling recently. Although the decreases slowed down during May, prices were still 0.6% lower in May compared to the previous year, according to the British Retail Consortium.

Non food prices were down 0.8% year on year, and food prices down by 0.3%.

Convenience stores have seen a reduction in trade as shoppers have returned to their old buying habits to some extent. But grocery shoppers are showing less loyalty, and supermarkets have reduced prices to maintain their market share.

High Street and shopping centre stores saw rising sales when lockdown was eased. But the reopening of pubs and restaurants has done little to increase visitor numbers (footfall) during daytime. Numbers fell from early to late May, although fewer shoppers were buying more.

This meant that retail sales in May were 10% up on May 2019. Clothing (especially summer clothes) footwear and furniture sales saw the highest increases.

Barclaycad say that restaurant sales are still more than 50% down compared with 2019, with spending at pubs and bars down by almost 20%.

Don’t expect it to last

Prices are expected to start rising again soon, and certainly will be increasing agan by the autumn.

However retailers are facing a number of cost increases including the ending of business rates relief.

In addition to this shipping costs have trebled during the last two years and food prices internationally are at a seven year high.

Brexit red tape is certain to have an effect on prices.In addition to this, retailers have built up rent arrears of £3bn as a result of the pandemic.

Retailers will try to claw back these costs, and increased prices seem inevitable.

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