While food prices continue to rise, retail prices are at a record low after high streets have been hit by the pandemic. British retailers have cut the prices of non-food items by the most since at least 2006 this month, Reuters reports.
British retailers are desperately trying to shift stock that they are struggling to sell due to the coronavirus, industry data has revealed.
Newly released figures revealed that retailers have suffered the biggest fall in sales since December 2008.
The data from the British Retail Consortium added to a number of signs that the closure of non-essential stores to slow the spread of COVID-19 has damaged the sector.
Non-food prices in April were 3.7 percent lower than a year before, the sharpest drop since the survey began in 2006, the BRC said.
“With lockdown effectively closing the high street, non-food retailers are reliant on online sales and prices have fallen as they look to sell stock,” said Mike Watkins, head of retailer and business insight at market research firm Nielsen, which sponsors the survey.
Clothing, footwear and furniture saw the biggest discounts, the BRC added.
By contrast, food price inflation rose to its highest since June 2019 at 1.8 percent in April.
This is up from 1.1 percent the month before.
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The increase comes as supermarkets scrapped sales promotions to reduce supply shortages.
Shop prices overall fell by 1.7 percent, the largest decline since January 2017.
BoE officials have said they expect inflation to fall as the crisis hits demand.
Deputy Governor Ben Broadbent said last week he expected inflation to sink below 1 percent in the coming months, less than half the BoE’s 2 percent target.
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This has been pushed down by plummiting global oil prices as well as the coronavirus impact on consumption.
This comes following the news that half of Britain’s best-known high street retailers could go bust by the end of the summer after suffering the effects of the coronavirus crisis.
A study of 34 retailers found five big names were already struggling with negative cash flow before the pandemic had even begun, relying on credit to fund any investment.
The report by business consultancy Alvarez & Marsal, the firm managing the collapse of Cath Kidston and sale of footwear chain Office, comes amid warnings of two million UK jobs losses and the biggest financial crisis since the Great Depression of the 1930s.
Figures from the Office for Budget Responsibility predict the worst GDP slump in a single quarter since records began in 1908.
The report that even if sales dropped by 10 percent during the coronavirus lockdown period, more than two-thirds of retailers would still fall into negative cashflow.
The findings suggest sales are set to drop as much as 70 percent.
This places retailers in dangerous territory, with no sign of lockdown lifting anytime soon.
The retailers studied included major high street fixtures such as Next, Card Factory, Shoe Zone, Mulberry, John Lewis and Dunelm.
Over the past fortnight, several household names have slipped into administration, leaving workers desperately in need of financial help.
Carluccio’s, Brighthouse, Cath Kidston and Debenhams all feature in the list – with Oasis and Warehouse set to be the next to fall.
Retailers are currently being offered business rates holidays and furlough, which pays 80 percent of employees’ wages and are also being protected from eviction.
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