Shop prices continued to fall in March as the third consecutive month of lockdown led many non-food retailers to heavily discount their products. Meanwhile, food prices inched up slightly but remained significantly below long-term averages as the main supermarkets tried to protect their market shares.
BRC-Nielsen Shop Price Index shows overall prices fell by 2.4%, the same rate of decline as in February and below the 12 and 6-month average decreases of 1.8% and 2% respectively
Non-food prices fell at a rate of 4%, compared with 3.9% in February, amid intense competition online as non-essential shops remained closed. The BRC highlighted that prices of fashion and footwear have seen double-digit declines in 11 of the past 12 months, highlighting how those worst hit have been working hard to tempt consumer spending.
Food inflation inched up to 0.3% in March from 0.2% in February after a 1.7% rise in ambient prices was offset by a 0.8% decline in the cost of fresh food.
Helen Dickinson, Chief Executive of the BRC, commented: “Unfortunately, many retailers may not be able to sustain these low prices in the coming months. Rising global food prices, at their highest since 2014, as well as increased oil prices and shipping costs, and Brexit red tape will likely begin to filter through, pushing up prices at tills.
“Government must ensure that new checks and documentation requirements this autumn avoid introducing significant friction on the import of goods, otherwise British consumers will end up paying the price.”
Mike Watkins, Head of Retailer and Business Insight at Nielsen, added: “With consumer spend limited by pandemic restrictions, non-food retailers are keeping any supply side driven price increases to a minimum and in some cases are reducing prices, to encourage shoppers to maintain spending in the run-up to Easter.
“Whilst food retailers have seen top-line sales grow at around 9% since the start of the year, we are now lapping the extreme comparatives of March last year and shop price inflation in food still remains very low and less than CPI.”
