Shop price inflation falls to 1% as retailers increase discounts

Shop price inflation slowed to 1.0% in April, down from 1.2% in March, as retailers increased discounts to encourage spending amid weakening consumer confidence.

The figure sits below the three-month average of 1.1%. Non-food prices fell into deflation at -0.1%, compared to 0.1% growth in the previous month.

Food inflation decreased to 3.1% in April from 3.4% in March. Fresh food prices saw a significant drop to 3.9% from 4.4% in the prior month.

Ambient food was the only category to see an increase, rising to 2.1% from 2.0%. This figure remains in line with the three-month average.

It comes as retailers compete on price for clothing, furniture and DIY goods to stimulate spring sales. Discounts on Easter items also contributed to the slowdown in food inflation.

The industry faces rising costs from domestic policies, including employment costs and packaging taxes. Higher fuel, fertiliser and commodity prices are expected to impact business costs.

Chief executive of the BRC Helen Dickinson said: “Bigger discounts in clothing, furniture and DIY goods helped pull down shop price inflation in April. With weakening consumer confidence, retailers competed harder on price to stimulate more spring spending. Food price inflation also slowed as retailers offered discounts on Easter items such as chocolate. While we’re yet to see the full force of the Middle East conflict feeding into consumer prices, it will not be long before it begins to.

“Retailers already face mounting cost pressures from domestic policies, with an extra £10bn a year added over the last two years from employment costs, packaging taxes and more. This will be compounded as rising fuel, fertiliser, and commodity prices begin to feed into business costs. Government can help moderate shop price inflation by fixing the non-commodity charges which inflate businesses energy bills. This could help mitigate the peak in food inflation, reducing the squeeze on struggling households who will ultimately bear the brunt.”

Head of retailer and business insight at NIQ Mike Watkins added: “Increased fuel prices are already leading to higher inflation, and we can expect a similar impact in the food and non-food supply chains in the months to come. However, retailers will look to hold back any price increases as long as possible as alongside fragile consumer confidence, accelerating inflation is likely to negatively affect consumer spending.”