Shop Prices Fall At Steepest Rate Since 2006

[Sancho Panza]

Sky News 14/7/14

'The prices of goods in UK stores fell for a 14th consecutive month in June and at their steepest level since December 2006.

The calculation - in the latest British Retail Consortium/Nielsen shop price index - showed deflation hit 1.8% in the month from a year ago, accelerating from a figure of 1.4% in May.

The report stated that the tumbling cost of clothing and electrical goods - attributed mainly to discounting - led the charge and while food prices rose, the pace of price growth was also at an eight-year low at 0.6%.

Clothing deflation soared to 13.7% from 11.4% while electrical goods fell 4% in June compared to 3.1% in May.

The report said a price war among supermarkets - as major chains battle the challenge from hard discounters - was a major factor in keeping food cost increases in check.

But it also highlighted the effect of a strong pound on import costs and cheaper commodity costs.

British Retail Consortium director general Helen Dickinson said: "This is the deepest level of deflation in non-food and the lowest rate of inflation for food since 2006 when our records began.

"The backdrop was equally promising with stable commodity markets and the continued strength of sterling suggesting inflation is set to remain low in the medium term."

Nielsen's head of retail and business insight Mike Watkins said: "Food inflation is still low, many supermarkets are price cutting and non-food prices remain deflationary, so the high street continues to generate little inflationary pressure."'

Are we all going Swedish?

[Sour Mash]

People are being squeezed due to the high cost of the essentials so it's hardly surprising that this is putting pressure on discretionary spending.

Let's see what happens to food prices over the next year ... my guess is strongly upward.

[onlyme2]

Food prices in the US, or more likely packet sizes are showing distinctly high levels of inflation. We are being shielded at the moment due to sterling trending higher after collapsing - there must have been some wholesale fiddling of the onflation figures a few years ago when sterling dumped. Only a mattter of time before it feeds through again.

[Frank Hovis]

I'm glad I cashed in 90% of my index-linked last month

[interestrateripoff]

People are being squeezed due to the high cost of the essentials so it's hardly surprising that this is putting pressure on discretionary spending.

Let's see what happens to food prices over the next year ... my guess is strongly upward.

Yep when essentials are going up luxury item consumption collapses.

I think more money printing is needed. We haven't QE'd enough to fix the problem.

Edited July 9, 2014 by interestrateripoff

[zugzwang]

14 months of continuous price falls. Hmmm... crashy crashy.

[anonguest]

Are we all going Swedish?

????

[Sour Mash]

Food prices in the US, or more likely packet sizes are showing distinctly high levels of inflation. We are being shielded at the moment due to sterling trending higher after collapsing - there must have been some wholesale fiddling of the onflation figures a few years ago when sterling dumped. Only a mattter of time before it feeds through again.

Timely article in the Grauniad today about oncoming food price inflation - though of course they focus on things like coffee as that's likely to be what most readers care about:

http://www.theguardian.com/lifeandstyle/2014/jul/09/enjoy-your-coffee-you-may-soon-not-be-able-to-afford-it

And yes, I suspect there was a hell of a lot of fiddling with figures when the pound crashed, to keep headline inflation figures down. Despite massive swings in currency and asset prices, inflation seems to pretty much be bound within the 1-5% range, even as we see headlines of 'inflation-busting' price rises on all sorts of essential stuff.

[katchytitle]

Food price inflation is alive and well. They still seem to measure food on a per item basis rather than a quality and weight basis. Everywhere you look packet sizes are smaller and ingredients are being substituted. Coffee blends are diluted; sugar/coco/chocolate is sold in smaller packets for the same prices;nuts and snack bars are woefully tiny compared to the 1990s (e.g Tracker) but the prices are higher. Inflation is probably running around 5-10% in food and fresh produce. They key to supermarket's money has been commercial packaging over loose produce sales practices by previous corner grocers. Its the same thing as containerisation allowing for a smooth market in international transport. As an example, take a look at the price of 3 onions wrapped in plastic vs picking 3 onions of equal size as loose items. The price is 3x as much for the wrapped item for the same product!

Its just what you need to feed the public to stoke demand. Its all a game and the only way to win is live within your means and find other activities outside consumerism and nest feathering to enjoy your life.

[Starla]

Its all a game and the only way to win is live within your means and find other activities outside consumerism and nest feathering to enjoy your life.

That's about as simple as it gets. Avoid consumerism. Create your own personal world of deflation. Enjoy.

[The Masked Tulip]

Lots of sales have been appearing on hotukdeals within the past 72 hours. Methinks there is a bit of a panic starting amongst the retailers.

[Ash4781]

I bet margins are fine because of reductions in quality, size, formulation, etc.

[rh2409]

Food price inflation is alive and well. They still seem to measure food on a per item basis rather than a quality and weight basis. Everywhere you look packet sizes are smaller and ingredients are being substituted. Coffee blends are diluted; sugar/coco/chocolate is sold in smaller packets for the same prices;nuts and snack bars are woefully tiny compared to the 1990s (e.g Tracker) but the prices are higher. Inflation is probably running around 5-10% in food and fresh produce. They key to supermarket's money has been commercial packaging over loose produce sales practices by previous corner grocers. Its the same thing as containerisation allowing for a smooth market in international transport. As an example, take a look at the price of 3 onions wrapped in plastic vs picking 3 onions of equal size as loose items. The price is 3x as much for the wrapped item for the same product!

Its just what you need to feed the public to stoke demand. Its all a game and the only way to win is live within your means and find other activities outside consumerism and nest feathering to enjoy your life.

McDonalds and Burger King in the States (maybe here, too) now bulk out their burgers with wood pulp (or micro-crystalline cellulose as they prefer to call it). Food price inflation is indeed alive and well, and more of it is inevitable. We're now in the final stages of the plutocrat money grab. Our economies are hollowed out shells, stock markets are a hugely over valued, rigged farce and governments are bankrupt. The only option for the One Percent to steal wholesale is now direct, unashamedly and nakedly, from ordinary people. Over the next year to to two years expect essentials like food and utilities to rocket in price, and look out for the government raiding your pension pot (as happened recently in Poland) and taking money directly from your bank account (as happened in yesterday in Spain with a 6 month, retrospective 0.03% charge on all bank accounts). We're in the endgame, complete social and economic collapse (barring some kind of massive political change, unlikely as our current crop of child abusing MPs serve only their plutocrat masters) is horrifyingly near. The One Percent are aware of this, but blinded by their greed to the probable consequences, which they believe they can weather, anyway.

http://www.itsarandomworld.com/2014/03/24/

[Sancho Panza]

????

Strengthening currency,burgeoning trade deficit,base rate cut.

Edited July 9, 2014 by Sancho Panza

[Sancho Panza]

Food price inflation is alive and well. They still seem to measure food on a per item basis rather than a quality and weight basis. Everywhere you look packet sizes are smaller and ingredients are being substituted. Coffee blends are diluted; sugar/coco/chocolate is sold in smaller packets for the same prices;nuts and snack bars are woefully tiny compared to the 1990s (e.g Tracker) but the prices are higher. Inflation is probably running around 5-10% in food and fresh produce. They key to supermarket's money has been commercial packaging over loose produce sales practices by previous corner grocers. Its the same thing as containerisation allowing for a smooth market in international transport. As an example, take a look at the price of 3 onions wrapped in plastic vs picking 3 onions of equal size as loose items. The price is 3x as much for the wrapped item for the same product!

Its just what you need to feed the public to stoke demand. Its all a game and the only way to win is live within your means and find other activities outside consumerism and nest feathering to enjoy your life.

You are Shaun Richards and I claim my fiver.

[1929crash]

Stuff you need - like food is not experiencing deflation.

[crashmonitor]

But stuff we don't is getting a bit boring. We are all ageing and turning Japanese and want a minimalist lifesyle. We need some young immigrants to get consuming. Meanwhile, deflation bring it on.

Stuff these days is becoming a bloody liability...the tips are getting full, what do you do.... fly tip the crap.

I think they should pay us to buy the crap that is being dumped from China. Might keep the shops going at least.

Edited July 9, 2014 by crashmonitor

[Venger]

Stuff you need - like food is not experiencing deflation.

Food is not much of an annual spend, and I don't really notice any difference from many years ago - even chocolate seems cheaper than back in the 90s - although that may be set to change. (WSJ, 8 July: Appetite for Chocolate in Developing Countries Has Sparked Rally in Cocoa, Near Three-Year Highs. Cocoa's 43% price surge in the past year through Tuesday has made the beans the second-best-performing commodity in the S&P GSCI Commodity Index)

I'm not holding out for food deflation to save pence and a few pounds.

Only house price deflation matters to me.

According to the reports, and ones in the last few quarters, food prices still going up, but at a slower rate. It's deflation clothing, of which many of us have loads and don't need designer, and electrical/furniture items; probably not helped by a sickly house transaction market and so much sucked up to older VI, and to the banks/HTB developers at very high prices/mortgage debt.

Inflation in essentials - and non essentials some people are committed to, such as school-fees which some VI project will leap again from already toppy heights - could eventually see a stronger deflationary recoil on house prices.

I don't see any salary inflation in our future for years to come, and that's the only kind of inflation that boosts house prices. Inflation in everything else (food, energy, medical) just takes away from the money people have to spend on housing.

http://patrick.net/housing/crash3.html

[Venger]

Saw 5 minutes of Krusty's TV show last night, helping younger people kit out their homes with free makeshift sort of furniture.

Seemed like one couple had no money for furniture after moving in.

[crashmonitor]

This computer isn't linking (not one I usually use) we not only have the lowest ever food spend in 2014 but the second lowest in the world as a proportion of household income at 9%. I consider myself a true Brit by skimping on the food, well I still get my five a day. But yes food used to be a bit of a crippler, it was back in the 80s, don't say I notice it either these days.

[Frank Hovis]

This computer isn't linking (not one I usually use) we not only have the lowest ever food spend in 2014 but the second lowest in the world as a proportion of household income at 9%. I consider myself a true Brit by skimping on the food, well I still get my five a day. But yes food used to be a bit of a crippler, it was back in the 80s, don't say I notice it either these days.

Supermarket food and clothes are both ridiculously cheap compared to how much they cost back in the 80s.

Rents and house prices have done their bit in taking up the slack of disposable income.

[Sour Mash]

Supermarket food and clothes are both ridiculously cheap compared to how much they cost back in the 80s.

Rents and house prices have done their bit in taking up the slack of disposable income.

Electronics/Technology products are massively cheaper - and of course, much better - than in the 80s. The cost of tech seems to fall relentlessly in price yet strangely, that constant price deflation doesn't seem to put consumers off buying it which is what the 'we must produce inflation at all costs' camp claims would happen should deflation take hold generally.

[Steppenpig]

I had a pack of wagon wheels recently. My god, did they always taste so revolting? I remember in the old days they used to be a treat, but this was like eating industrial waste. Only a pound for the pack though. I think I might get some more.

Edited July 9, 2014 by BigPig

[zugzwang]

Electronics/Technology products are massively cheaper - and of course, much better - than in the 80s. The cost of tech seems to fall relentlessly in price yet strangely, that constant price deflation doesn't seem to put consumers off buying it which is what the 'we must produce inflation at all costs' camp claims would happen should deflation take hold generally.

That line about expectations is the standard nonsense we get fed by economists. In fact financial markets are the real reason we can't let deflation set in. Everything is traded with margin and leverage which requires a upward price bias to maintain over the medium term.

[Craig_]

I had a pack of wagon wheels recently. My god, did they always taste so revolting? I remember in the old days they used to be a treat, but this was like eating industrial waste. Only a pound for the pack though. I think I might get some more.

Likewise with a box of Roses I had recently. They all tasted exactly the same, like a mixture of nutella and used chip fat!