Good news for shoppers as price inflation slows to 0.4pc

The Momentum UK Team 07 May 2013

Shop price inflation dropped to 0.4% in April, down 1% from figures in March, according to latest figures from the British Retail Consortium (BRC). The figure represented the lowest rise seen from month to month since November 2009.

The BRC shop-price inflation index also recorded a drop in food price inflation between March and April, from 3.5% to 2.9%. Non-food items actually fell in price across the same period and were recorded as down 1%, on contrast to a 0.2% rise seen in March.

Eggs and dairy products were among the food products which saw higher prices rises between March and April, while some meat and fresh produce saw price falls across the same period.

Mike Watkins, Head of Retailer and Business Insight, at Nielsen a company which collects the data for the BRC said:

"The good news for shoppers is that, aside from some seasonal price changes, there is a trend of price reduction in many food categories and price deflation in non-foods.

“This time last year food prices were on the increase during the washout of early summer 2012. Retailers will now be looking to keep prices competitive over the next few weeks to keep whatever momentum there is in sales growth going, and for high street retailers this could require summer discounts to start sooner rather than later."

The figures demonstrate the largest gap between shop price inflation wider price inflation as recorded by the Consumer Price Index (CPI) in over a year. CPI inflation which measures inflation on a more diverse range of goods than the BRC index, including energy and housing costs, remained steady in March at 2.8%. CPI figures for the March to April period are not yet available.

Commenting on the figures from BRC, Director General Helen Dickinson said:

"Household finances are still under pressure but it's clear that isn't coming from the shops. In April, overall shop price inflation was sharply down on the previous month, to its lowest for three and a half years, as a result of retailers working harder on promotions to encourage customers and the easing of some commodity costs.

"In particular, price competition on non-food goods intensified in the face of average incomes rising at their slowest for more than a decade and poor demand for seasonal products. Spring lines, in fashion and gardening for example, have not taken off in the way they did last year because warmer weather has been much more reluctant to take hold."