Latest figures from the BRC and Nielsen show overall shop prices fell by 2.4% in February – the lowest deflation rate since May 2020.
Non-food prices fell by 3.9% last month compared with a 3.6% decline in January.
“With the third lockdown constricting consumer spending across all income brackets, many retailers have been vigorously discounting products in an attempt to encourage additional spending,” said BRC Chief Executive Helen Dickinson.
Meanwhile, food inflation was steady at 0.2%, which was the lowest inflation rate since February 2017. Fresh food prices fell for the third consecutive month, dropping by 0.8%, while ambient food price inflation easing to 1.6% from 1.7% in January.
Dickinson commented: “Despite Brexit-related costs, food inflation remained steady thanks to fierce competition between grocers to maintain their market share amid declining incomes for some UK households.”
However, she warned that consumers could face higher prices in the future as a result of rising global food prices, shipping costs, and Brexit red tape.
Mike Watkins, Nielsen’s head of retailer and business insight, added: “With the national lockdown continuing, prices across fashion and clothing retailers continue to fall ahead of the anticipated reopening of stores in April.
“However, for grocery retailers, despite basket spends growing by over 25% and volume sales up 4% since the start of the year, more shoppers are looking to stretch their budget and price-led competition is keeping a lid on increases in food prices.”
NAM Implications:
- Thereby helping to produce official inflation rates of say 2% per annum…
- …when consumer perceived inflation could be more like 10%+?
- Key issue is which version will drive consumer demand, post-Lockdown?
