Shop price deflation deepened in March

IThe BRC-Nielsen Shop Price Index for March was published today, covering the 5th to 9th March 2018.

• Shop price deflation deepened to 1.0% in March from 0.8% in February. Shop Prices have been deflationary for 59 months now and this is the deepest deflation since February 2017.
   
• Deflation in Non-Food prices eased in March, with prices decreasing at a rate of 1.9% compared to February when prices declined by 2.2%.
   
• Food inflation slowed down substantially in March, inflation standing at 0.4%, down from 1.6% in February. This is the lowest food inflation rate since February 2017.
   
• Fresh food inflation slowed to the lowest rate since March 2017. Prices increased by 0.3% in March on the same month last year, compared to 0.9% in February. This is the lowest rate of inflation since March 2017.
   
• Ambient food inflation rate was lower in March by close to two percentage points compared to February. Ambient prices increased by 0.6% in March on the previous year, while in February inflation stood at 2.5%. This is the lowest rate since February 2017.

Helen Dickinson OBE, Chief Executive, British Retail Consortium:

“Shop price deflation accelerated in March, driven by a substantial slowdown in food inflation, which reached its lowest rate for a year. 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.

“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.

“In light of this, the support for a zero-tariff trade deal on the end-status agreement between the EU and UK, is encouraging news for retailers. But this needs to be accompanied by a focus on reducing potential customs friction on the movement of goods, in order for retailers to mitigate any further pressure on prices for their customers.”

Mike Watkins, Head of Retailer and Business Insight, Nielsen:

"Consumers are still coping with falling disposable incomes and non-food retailers are having to keep price increases to a minimum or make further price cuts, as consumer demand has been weak since the start of the year. 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% 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.”

Source : British Retail Consortium
Image : Shutterstock

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