Today is being dubbed ‘worse-off Wednesday’ as millions of consumers start to feel the effects of the government’s tax changes, but the British Retail Consortium (BRC) has announced some positive news regarding inflation.
Its Shop Price Index, compiled alongside global information group Nielsen, shows that overall shop price inflation dropped from 2.7 per cent in February to 2.4 per cent in March.
Additionally, food inflation fell from 4.5 to four per cent and non-food inflation slipped 0.1 per cent to 1.5 per cent.
BRC Director General Stephen Robertson said that the figures prove that the rise in overall inflation, which is having such a negative impact on consumer spending in the UK, is not coming from the high street as shop price growth is “well below the Consumer Price Index”, currently running at 4.4 per cent.
“Global commodities are still exerting considerable upward pressure on retailers’ costs, but a greater intensity of promotions has led to a fall in year-on-year food inflation which will come as a great relief to hard-pressed families,” Robertson added.
“Over the shorter term, food was actually cheaper in March than February.
“It’s a clear demonstration of competition in the retail sector keeping costs down for shoppers.”
Research from online shopping comparison website Kelkoo, published yesterday, predicted that retail spending could be significantly affected by changes to the tax system implemented today.
The study estimated that the lowering of the income tax threshold and the increase in national insurance contributions, combined with January’s VAT hike, could result in a £2.35 billion reduction in retail spend in April alone.