Shopkeepers are still furiously cutting prices in an attempt to retain market share and boost sales, despite the brisk economic recovery, a survey shows.
October saw the sixth consecutive month of annualised shop price deflation, according to the British Retail Consortium-Nielsen shop price index. Overall prices fell 0.5 per cent on the same month a year earlier. Although food prices rose by 2.7 per cent year on year, non-food prices fell 2.4 per cent, the fastest rate of deflation since December 2008.
"Despite the slightly more optimistic economic outlook... consumers are still reluctant, unwilling or, in some cases, unable to increase spend," said Mike Watkins of Nielsen.
A separate snapshot of the wider services economy, however, pointed to the fastest pace of growth in 16 years, fuelling hopes of another strong increase in GDP in the final quarter. The Markit/Cips Index of services purchasing managers surged to 62.5, up from 60.3 the previous month and hitting its highest level since May 1997. Any reading above 50 signals growth.