Thursday, 13 January 2011
Shop price inflation rate increases
The rate of inflation of goods sold in shops increased in December and consumers were warned that more price hikes are on the way.
Shop prices were 2.1% more expensive in December than a year ago, as the rate crept up from 2% in November, driven by the rising cost of non-food items..
Food price inflation remained at 4% in December, but non-food inflation increased to 1.1% from 0.9% the previous month, pushed upwards by toiletries, cosmetics, DIY and home furnishing products.
January's rise in VAT from 17.5% to 20% and further hikes in the price of commodities, such as oil, wheat and corn, are expected to lead to more pain for consumers in 2011.
Its not clear if the lower VAT rate last Christmas, 15%, is allowed for in these figures, but any increase in November December when discounting was all the rage is most unwelcome.
HMG has left interests alone at 0.5% again.
For how much longer though? Another month. Six months more? The January rates are probably not going to panic anyone too much because many non-food retailers, including some very large chains, didn't bother with hiking prices in line with new VAT rate. Food and fuel will have pushed up inflation though.
But by March all new goods will have had the increase added. Spring rise? Buried among the Royal wedding at the end of April?