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Sharp fall in shop price inflation in April

There was a sharp fall in shop price inflation last month due to intense price competition amongst retailers as the cooler weather affected demand for seasonal products.

GENERAL MERCHANDISE

Sharp fall in shop price inflation in April

There was a sharp fall in shop price inflation last month due to intense price competition amongst retailers as the cooler weather affected demand for seasonal products.

Figures released by the British Retail Consortium and Nielsen show that overall shop price inflation fell to 0.4% in April from 1.4% in March, the lowest level for three and a half years.  Food inflation fell to 2.9% in April from 3.5% in March, while non-food items have returned to deflationary territory, down 1% from a 0.2% rise in March.  

Helen Dickinson, BRC director general, 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.

"Food inflation slowed in April, for fresh as well as tinned and packet items, thanks to promotional activity and falls in a number of key costs working through. 

Dickinson added that the big drop in overall shop price inflation has resulted in the largest gap for over a year between the Shop Price Index and the wider Consumer Price Index which includes energy and housing costs.

Mike Watkins, head of retailer and business insight at Nielsen, said: "The good news for shoppers  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."


 

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