8th April 2015
Shop prices decreased for the 23rd month in row and at a record rate in March.
The BRC-Nielsen Shop Price Index reported annual deflation of 2.1% in March, compared to 1.7% in February.
Deflation in food prices was 0.9%, from a 0.4% fall in February.
On a 12-month average basis, the Shop Price Index reported deflation of 1.7%.
Non-food deflation accelerated to 2.8% in March from 2.5% in February.
BRC director general, Helen Dickinson, says: “Prices in Britain’s shops reached another new low, this month by -2.1 per cent. That’s the deepest deflation rate since our records began in December 2006.
“Food prices saw a further drop, largely as a result of promotions for fresh food, whilst non-food prices fell at a faster rate than last month, hitting a twenty-fourth consecutive month of deflation.
“Clothing and electricals continue to outshine by offering consumers eye-catching bargains. In fact, there’s evidence of plenty of promotions and price-cuts in non-food items which should help drive up sales at a time when retailers are turning their attention to the Summer ranges. ”
Dickinson adds: “Both retailers and consumers will cheer on a hat-trick of good economic news. The Consumer price index (CPI) has fallen to zero for the first time on record, boosting incomes in real terms and bringing the UK to the brink of a spell of deflation that is expected in the coming months. That fall is largely the result of a deep oil price slump (down 49 per cent on a year ago) and the continuing fierce competition among supermarkets who’ve dropped fuel and food prices over the year.
“Consumer confidence has also soared to a near 13-year high. Retailers will have been hoping that this translated into shoppers being prepared to splash their cash over the long Easter weekend.
“With strong consumer confidence and relatively benign macro-economic conditions we can expect the nation to respond with their feet or with a mouse click in the coming weeks.”
Mike Watkins, head of retailer and business insight at Nielsen, says: “Prices continue to fall across the retail industry and deflation is likely to be with us for the near future, which means shoppers are going to be able to stretch their budgets further when shopping in store or online.
“The implication for food retailers is that this may help sustain the slowly improving sales volumes we have seen in recent weeks, and also encourage consumers to spend some of their savings on affordable indulgences. For many high street fashion, home and outdoor retailers, lower prices are being backed up by attractive promotions which comes at good time as momentum builds in selling late Spring and early Summer ranges.”