Helen Dickinson, head of retail at KPMG comments on the latest inflation figures from the Office for National Statistics:
“Figures out from the Office for National Statistics put CPI at 5% in October and RPI at 5.4%, down from 5.6% in September. Certainly UK consumers and retailers will welcome this fall in headline inflation. However, increases in shop prices are lower than these figures suggest as the brunt of high inflation is predominantly coming from travel and utility costs, not from the retail sector.
“Retailers continue to do all they can to keep prices for consumers down but given the weakness in demand they too are suffering from the impact of higher transport and facility costs. Hence, the health of the sector is being negatively impacted as maintaining margins continues to be an uphill battle for many UK retailers.
“The cost of petrol and household utilities will continue to be the biggest contributors to the squeeze on personal disposal incomes. As a result, this squeeze will continue to affect retail spending which has remained largely subdued even as we enter the peak trading period of the year - Christmas.
“With a no-win situation on the horizon, both retailers and consumers are dubious about how far their pound will stretch.”
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KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with nearly 11,000 partners and staff. The UK firm recorded a turnover of £1.6 billion in the year ended September 2010. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. We operate in 150 countries and have more than 138,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. KPMG International provides no client services.