The price of goods in shops fell again in March on the back falling non-food prices and easing food inflation. However, the data was accompanied by a warning that the coronavirus outbreak could lead to higher grocery prices.
The BRC-Nielsen Shop Price Index shows overall prices fell 0.8% last month, accelerating from 0.6% deflation in February. However, the data used to calculate the figure covered a period from 2 – 6 March, before the health crisis fully impacted the retail sector.
Non-food prices fell 1.9%, marking the steepest rate of decline since May 2018. This was driven by retailers continuing to battle hard for consumer spending by keeping prices down.
Food inflation eased to 1.1% in March, down from 1.6% the month before. Fresh food inflation eased for the third consecutive month, up only 0.4% compared to 0.6% in February, as lower global prices in 2019 filtered through. Ambient food inflation slowed sharply to 2% in March, down from 3% the month before.
However, Helen Dickinson, Chief Executive of British Retail Consortium, suggested that food prices, particularly of fresh produce, may be impacted by higher costs of seasonal farm labour as the coronavirus outbreak curtails the hiring of overseas workers. The spike in demand for groceries has also led the supermarket chains to halt their usual promotions and price cuts.
In non-food, prices are expected to be pushed down by lower demand. “It is likely that the combination of future economic uncertainty and job losses, whether realised or potential, will drive people to reconsider their spending patterns and to save more,” said Dickinson.
She added: “It is vital the Government monitors the situation carefully and is ready to continue taking bold action where necessary to support jobs and businesses.”
NAM Implications:
- As night follows day…
- Key is how much will be down to you…
- …and to what extent the relative competitive set, by category…
- …will alter.
