Fall in shop prices marks fifth year of deflation

Shop prices fell by 1% in April marking the fifth year of deflation for retail prices.

According to the British Retail Consortium (BRC) and Nielsen’s monthly Shop Price Index’s, this also represented the deepest period of deflation since last February.

This drop fell in line with the pace of decline seen in March.

Deflation for non-food items showed the biggest fall of 2.2% compared with March which saw a decline of 1.9%.

On the other hand, food inflation rose by 1% overall, with fresh food showing an increase of 0.9% and ambient food 1.2%. This was attributed to global commodity prices being higher than they were last year.

Helen Dickinson OBE, chief executive, BRC, said: “The upward pressure on prices from the fall in the pound is weakening, leaving underlying commodity prices and strong competition for customers the key influences on inflation.

“As negotiations on Brexit continue to play out against this backdrop the importance of addressing the issue of frictionless movement of goods across borders is increasing. Retailers must have clarity on this position if they are to continue to provide a wide range of goods for consumers at affordable prices.”

Mike Watkins, head of retailer and business insight, Nielsen, added: “With weak consumer demand, any success in sales performance is coming at the expense of retailer’s margins, with lower prices in non food and inflation now hovering around 1% in food stores.

“Recent industry data suggests poor footfall and with unseasonably cool weather punctuated by a brief hot spell, sales momentum has been hard to sustain. So whilst promotional activity continued after Easter, retailers are still keeping prices competitive to tempt shoppers back into store as consumers not yet feeling better off.”

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