Shop prices continued to drop at an accelerated rate throughout March, raising hopes that Brexit-fueled inflation is coming to an end.
According to the BRC-Nielsen Shop Price Index, deflation hit one per cent last month, rising from 0.8 per cent in February and marking the highest level of inflation since February last year.
Though non-food inflation eased during the month from 2.2 per cent to 1.9 per cent, food prices increased at their lowest rate for over a year, helping drag down the total figures.
Overall food inflation dropped fourfold from 1.6 per cent in February to 0.4 per cent last month.
This was driven by falling fresh food inflation which fell from 0.9 per cent in February to 0.3 per cent, and ambient food inflation which plummeted to 0.6 per cent from 2.5 per cent in March.
“As the impact of the pound’s depreciation one year on are beginning to fizzle out, retailers are passing the positive impact through to the shop floor,” British Retail Consortium (BRC) chief executive Helen Dickinson said.
“So some welcome respite for consumers, particularly with the gap between inflation and wage growth finally narrowing.
“But with further wage increases on the horizon putting upward pressure on prices, consumers will continue to feel the grip on their spending power.
Nielsen retail and business insight analyst Mike Watkins added: “With inflationary pressure receding in the food supply chain, we can now expect supermarkets to focus on lowering prices and to use promotions to drive visits as part of the battle for gaining share of wallet.
“With 27 per cent of the value of the shopping basket being discounted by offers or short term price cuts, which is a 10-year low, shoppers will take advantage of any increase in discounting as they seek out the best value for money.”