As Yohay pointed out in the comments (he’s good you know, you should check his site out forexcrunch.com) average shop prices fell 1.2% on the year and was the largest fall since Oct 2001. Falls at the petrol pumps (-5.0%) was the main driver while food store prices fell 0.1%, the first annual fall since Dec 2004. The fall in fuel prices is always welcome, especially when it costs me nearly 90 sheets to fill the car up, but the fall in shop prices suggests that there’s still some lack of confidence that higher prices can be passed on to shoppers in the long term.
That might change however, as the UK looks to be going on a bit of a spending spree and kitting out their houses. The quantity bought in household goods stores rose 12.7% on the year which is the biggest increase since Oct 2001. Furniture stores were the biggest beneficiaries with sales up 23.4% and the largest growth since records started in 1988. When finances are tight people put off spending out on new stuff for their homes, the new sofa can last a bit longer and the dining room table has still got some life in it, but when the money situation brightens then people are more confident and will splash the cash.
The only caveats to that is that we hope that the old credit card hasn’t been pulled out the back of the draw to pay for it and that the high amount of sales haven’t come via big sales with heavy discounting.
We’ll find out if that has happened in due course though.
All in all it was a steady report, and they can often be volatile, so as long as we start to see a steady trend up it’s another tick in the “good” column for the UK economy.
Getting in before the EU ban. There’s no flies on us here in the UK
