Shop prices continued to fall in February, down 2.4%, marking the lowest deflation rate since May 2020.
According to the latest figures from the BRC-Nielsen Shop price Index, the decline was below the 2.2% experienced in January and is also below the 12- and six-month average price decreases of 1.7% and 1.8%, respectively.
Non-food prices fell by 3.9% in February, compared to a decline of 3.6% in January. This is the fastest rate of decline since May 2020 and is below the 12- and six-month average price declines of 3.3% and 3.4%, respectively.
In addition, food inflation was steady at 0.2% in February. This is the lowest inflation rate for the category since January 2017.
Fresh Food prices also fell for the third consecutive month, with prices decreasing by 0.8%, the same rate as in January. This is below the 12- and six-month average price growth rates of 0.2% and -0.2%, respectively. Ambient Food inflation also slowed to 1.6% in February, down from 1.7% in January.
Helen Dickinson OBE, chief executive, British Retail Consortium: “Prices in February fell, driven by a drop in non-food prices. With the third lockdown constricting consumer spending across all income brackets, many retailers have been vigorously discounting products in an attempt to encourage additional spending.
“Meanwhile, despite Brexit-related costs, food inflation remained steady thanks to fierce competition between grocers to maintain their market share amidst declining incomes for some UK households.”
She added: “However, consumers could face higher prices in the future as a result of rising global food prices, shipping costs, and Brexit red tape. Many retailers are already under great financial strain due to ongoing forced closures and restrictions, and some will not be in a position to continue to absorb all of these added costs.
“It is vital the Government uses the Budget today to ease cost pressures on retailers by extending targeted business rates relief for the worst-hit businesses, extending the moratorium on aggressive debt enforcement and lifting the EU state aid limits on lockdown grants. Otherwise, retailers will struggle to continue to provide the competitive prices their customers are used to.”