Shop price inflation reached its lowest rate in three and a half years last month as commodity prices eased and retailers offered promotions and discounts, new figures released today reveal.
According to the British Retail Consortium (BRC)-Nielsen Shop Price Index, overall shop price inflation declined one per cent month-on-month to 0.4 per cent in April while food and non-food also experienced falls.
Food inflation dipped 0.6 per cent to 2.9 per cent last month while non-food “returned to deflationary territory”, down one per cent from a 0.2 per cent rise in March.
Helen Dickinson, Director General of the BRC, said that, although household budgets remain under pressure, this is not coming from shops as retailers seek to encourage spend. Amid increasing competition.
“In particular, price competition on non-food goods intensified in the face of average incomes rising at their slowest for more than a decade and poor demand for seasonal products,” Dickinson added.
“Spring lines, in fashion and gardening for example, have not taken off in the way they did last year because warmer weather has been much more reluctant to take hold.
“Food inflation slowed in April, for fresh as well as tinned and packet items, thanks to promotional activity and falls in a number of key costs working through.
“The big drop in overall shop price inflation has given us the largest gap for over a year between the SPI and the wider Consumer Price Index which includes energy and housing costs.”
All sub-categories saw a decrease in inflation over the period and this trend is likely to continue as Summer lines are introduced across the high street, forcing retailers to offer discounts to compete with rivals.
“The good news for shoppers is that, aside from some seasonal price changes, there is a trend of price reduction in many food categories and price deflation in non-foods,” explained Head of Retailer and Business Insight, Nielsen Mike Watkins.
“This time last year food prices were on the increase during the washout of early summer 2012.
“Retailers will now be looking to keep prices competitive over the next few weeks to keep whatever momentum there is in sales growth going, and for high street retailers this could require summer discounts to start sooner rather than later.”