Shop prices continued to decline throughout February, providing relief for consumers across the UK and adding weight to analysts’ expectations that inflation has peaked.
According to new data from the monthly BRC-Nielsen Shop Price Index, deflation grew from 0.5 per cent in January to 0.8 per cent throughout the last month.
These figures were helped by a slow down in food deflation, easing from 1.9 per cent in January to 1.6 per cent.
Although ambient food inflation saw a month-on-month rise of 0.3 per cent to 2.5 per cent, fresh food dropped from 1.7 per cent to 0.9 per cent, the lowest rate of deflation since September 2017.
“This is a further sign that we have passed the peak of the upward pressure on inflation caused by the fall in the pound in June 2016,” British Retail Consortium chief executive Helen Dickinson said.
“This will ease the squeeze on consumer incomes over the coming year, but it’s likely to do little to lift the rate of growth in consumption.
“Earnings are still falling in real terms, despite wages increasing, and savings are unlikely to provide the same support to spending that they have over the last 18 months.”
“While it’s good news that earnings and inflation are heading in the right directions for consumers, retailers can expect to see more of the same tough trading environment over the coming months.
“With that in mind, it’s imperative we get clarity and a definitive agreement over the next month’s Brexit negotiations around the exact form of the transition arrangements.
“Both the transition and the UK’s future relationship with the EU will determine how we maintain consumers’ current access to a diverse choice of affordable goods.”