Shop prices have shown their “first sign of an upward trend” after deflation slowed during December.
The British Retail Consortium (BRC) and Nielsen Shop Price Index revealed overall shop prices fell 1.4% in December, a deceleration from the 1.7% fall during the preceding two months.
Non-food deflation accelerated to 1.9%, down from 2.3% in the previous month – this was found to be the weakest deflation rate since June 2015.
Helen Dickinson, chief executive at the BRC, said: “December saw an easing of shop price deflation. Prices were down 1.4% compared [with] last year, but the majority of the categories we monitor, particularly non-food, saw month-on-month increases in prices, with clothing and footwear seeing month-on-month inflation for the first time in nearly two years.
“We expect the general trend in inflation to be upwards over 2017. The magnitude of the exchange rate movement and commodity price rises combined with the increasing costs of doing business means that retailers will have little choice other than to pass on some of these rising costs into prices but effect will be lessened by the intensity of competition.”