Grocery costs fall as shop prices remain deflationary


Shop prices remain low as deflation continued in May according to the BRC Nielsen Shop Price Index.

Overall shop prices revealed a deflation of 1.8% in comparison to 1.7% in April. Non-food deflation fell to -2.7% from 2.9% in monthly like-for-likes, while food returned back to deflation, fluctuating around zero. Further, fresh food saw an accelerated deflation rate, dropping to -0.8% from 0.5% the previous month.

 “The fact that today‘s figures remain deflationary doesn‘t come as a great surprise. We‘ve experienced a record run of falling shop prices and, for the time being, there‘s little to suggest that‘ll end any time soon – so the good news for consumers continues. Indeed, with food prices remaining flat at the same time as wages continue to grow means customers will have yet more money in their pockets at the end of their weekly shop” commented Helen Dickinson, Chief Executive of BRC.

“Looking slightly longer term we know that the recent commodity price increases will start to put pressure on retailers to raise their own prices. We would normally expect these input costs to filter through to prices eventually, but the big question is how far fierce competition in the industry will insulate consumers from price increases.  If retailers do continue to absorb these costs it‘ll be more important than ever that other external costs, business rates chief among them, are brought under control.”

 “Shop price inflation remains below consumer price inflation and falling food prices are still being driven lower by global commodity prices as well as intense competition, which shows no sign of relenting any time soon. Non-food prices also continue to fall, and with shoppers indicating that they are becoming more cautious about spending, retailers will have to keep prices the same or probably even lower over the next six months” added Mike Watkins, Head of Retailer and Business Insight at Nielsen.