Overall shop prices remained in deflation last month, with non-food categories driving the fall, according to latest figures from the British Retail Consortium (BRC). However, food inflation accelerated, and the trade body warned of higher prices all round in the coming months as retailers offset the extra costs resulting from the Autumn Budget.
Data from the BRC-NielsenIQ Shop Price Index shows deflation eased to 0.4% year-on-year in March, against a decline of 0.7% in February.
Non-food deflation was 1.9% compared to a fall of 2.1% the month before. Prices fell for most non-food categories, with clothing and footwear seeing double-digit deflation as a result of weak consumer demand.
Meanwhile, food inflation increased to 2.4% in March, against growth of 2.1% in February. Fresh food inflation decreased from 1.5% to 1.4%, but ambient food inflation rose from 2.8% to 3.7%. Alcoholic and non-alcoholic beverages saw some of the most significant increases due to changes in duties and higher global sugar prices.
“With retailers bracing for significant extra costs which kick in later this week as a result of the Budget, inflation will likely accelerate in the coming months,” said Helen Dickinson, Chief Executive of the BRC.
“Along with new packaging taxes later this year, retailers will be shouldering an additional £7bn in costs. It is crucial that the Employment Rights Bill and business rates reform don’t further inflate costs and increase red tape.”
Mike Watkins, Head of Retailer and Business Insight at NielsenIQ, added: “There is competition on the high street as retailers look to pull in reluctant shoppers with seasonal promotions. However, with upward pressure on prices, retailers may also need some focussed price cuts to help footfall in the run-up to the late Easter.”
NAM Implications:
- i.e. it ain’t over yet…
- …or anything like it.
- More like the possible end of the beginning…
- …hopefully.
