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UK retailers report biggest annual price falls since May

LONDON (Reuters) - British retailers reported the biggest annual fall in prices since May this month, adding to signs of pressure on the sector since non-essential stores had to close to the public from Jan. 5 as part of renewed COVID lockdown measures.

The British Retail Consortium, a trade body, said on Wednesday that its members saw average prices fall by 2.2% in January compared with a year earlier, the largest such fall since the depths of Britain's first lockdown in May.

Food prices rose by 0.2%, the smallest increase since January 2017, and non-food prices dropped by 3.6%.

"Post-Christmas sales and the national lockdown drove non-food prices down – especially for clothing and DIY goods," BRC chief executive Helen Dickinson said.

Britain's official measure of consumer price inflation, which covers a wider range of goods and services, showed annual prices rises of 0.6% in December.

Dickinson said that as well as facing softer consumer demand, retailers were under pressure from higher costs which they may prove unable to absorb.

"Brexit-related red tape, rising global shipping costs and food commodity prices, as well as the weight of forced closures and restrictions for many retail businesses, means that pricing pressures are stacking up," she said.

New lockdown measures to combat a surge in COVID-19 cases and deaths have added to a normal post-Christmas belt-tightening by British consumers.

Experimental data last week from the Office for National Statistics, which is not seasonally adjusted, showed a 35% fall in consumer spending in early January, and on Tuesday the Confederation of British Industry reported its weakest retail number since May.

(Reporting by David Milliken, editing by Andy Bruce)

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