Shop prices slowdown has reached the lowest level since December 2021, driven by the dropping cost of food and intense competition amongst retailers.
Data by the British Retail Consortium (BRC)-NielsenIQ shop price index recorded a drop from 2.5 percent in February to 1.3 percent in March.
Consumers saw food prices ease to 3.7 percent in a tenth consecutive deceleration and lowest inflation since April 2022.
The cost of both fresh and ambient foods went down below the three-month average rates and was record low in March.
The BRC chief executive Helen Dickinson said that retailer competition was driving the slowdown in shop prices.
“Shop price inflation eased to the lowest level since December 2021 last month as retailers continued to compete fiercely to bring prices down for their customers. While Easter treats were more expensive than in previous years due to high global cocoa and sugar prices, retailers provided cracking deals on popular chocolates, which led to price falls compared to the previous month. Dairy prices also fell on the month as farmgate prices eased, and retailers worked hard to lower prices for many essentials,” Ms. Dickinson said.
Inflation and Consumer Confidence
The deceleration of shop prices comes as “good news” for consumers, Ms. Dickinson said. It comes against the backdrop of easing inflation reported by the Office of National Statistics (ONS) in February.Last month, the government welcomed the news of a 3.4 percent Consumer Prices Index rise, down from 4 percent in January.
Commenting on the figures, Chancellor Jeremy Hunt said that lowering inflation would bring “relief to families” and was a testimony to the government’s success in bringing the rate down and ultimately to the two percent target.
The lowest headline rate for two-and-a-half years was boosted by falls in food and non-alcoholic beverages sectors, as well as restaurants and hotels.
“This confidence would be further enhanced if the Bank of England now did the right thing and started to reduce interest rates, especially as energy prices, a factor in inflation, will fall again in April,” said CEO of BIRA, Andrew Goodacre.
Pressure on Retailers
While consumers are feeling the effects of the inflation ease, the cost pressures for retailers remain significant, reported the BRC.“These costs include a 6.7 percent business rates rise, ill-thought-out recycling proposals, and new border checks—all at the same time as the largest rise to the National Living Wage on record. The industry needs pro-growth government policy that supports investment and helps keep down prices for households up and down the country,” Ms. Dickinson said.
In the run-up to Mother’s Day and Easter, supermarkets focussed on price cuts and promotional offers earlier in March. The “intense” competition contributed to the fall in food prices, said Mike Watkins, head of retailer and business insight, NielsenIQ.
“A year ago, food inflation was 15 percent so this was to be expected,” he added.
While the cost of food appears to be on a downward trajectory, a growing number of Britons still have to turn to food banks.
