LONDON: Prices in Britain’s shops and forecourts declined at a record pace in January, as plunging global oil prices slashed the cost of petrol.
Official retail sales figures, published on Friday, showed average store prices declining at an annual rate of 3.1% last month – the largest drop since records began in 1997.
The month-on-month fall, at 2%, was the largest since the depths of the credit crisis in 2008. Petrol prices were 15.1% lower than a year earlier.
This measure of store prices is narrower than consumer price inflation (CPI), which also includes utility bills, and the cost of services such as haircuts and restaurant meals.
CPI was running at 0.3% in January, and the Bank of England expects it to turn negative in the coming months.Consumers trimmed their spending in January, with the volume of sales 0.3% lower than a month earlier, the ONS said.
Rising sales of petrol, as drivers took advantage of its cheaper price, were more than offset by falling purchases in supermarkets, clothing and shoe shops.However, analysts pointed out that the year-on-year growth rate of retail sales remained relatively strong, at 5.4%.Chris Williamson, of data-provider Markit, said: “The decline comes on the back of strong spending growth in the closing months of 2014, fuelled in part by consumers embracing the first major Black Friday promotions in the UK. To have some pay-back as households rested their wallets in January is no big surprise.”
Governor of the Bank of England Mark Carney said last week that consumer spending power should get the biggest boost in a decade in 2015, as real take-home pay starts to rise.
