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Shop prices deflationary for 47th consecutive month

Overall shop prices reported deflation of 0.8% in March, the shallowest rate since December 2013, according to a report by the British Retail Consortium (BRC).

Clothing and footwear-specific shop prices reported deflation of 5.9% in February, compared to the same month in 2016. This figure marks a 0.3% deceleration compared to February 2017.

In total, non-food deflation accelerated to 2.0% in March, compared to the 1.8% fall in February.

BRC chief executive Helen Dickinson said: “Global food commodity costs have risen by 17 per cent on average over last year’s figures, building substantial pressure in the food supply chain. Although UK food shop prices are seeing their steepest rise this month for over two years, the increase is still only one per cent, reflecting the continuing intense competition between retailers. The limited increase is even more impressive, given the magnitude of the devaluation in sterling.

“The picture in non-food prices is also positive for consumers. Customers have now had the benefit of four years of non-food price deflation which increased to a two percent fall in prices year on year in March. Looking across both food and non-food, shop prices in total have been falling for 47 consecutive months. Other factors outside of retail shop prices continue to be the main drivers of CPI rising faster than expected, for the moment at least. The squeeze on household disposable incomes will tighten as the year progresses.

“Looking ahead, ensuring the continuation of value for consumers through tariff-free trade must be at the heart of plans for a smart Brexit.”

Mike Watkins head of retailer and business insight, Nielsen added: “Inflation is gaining momentum across the economy but in food retailing, the cost price increases being passed onto shoppers in March was lower than the Consumer Price Index and in the Non-Food channel there is still deflation. We anticipate this trend to continue over the next few months. If so, this would be good news for shoppers managing household budgets when prices are rising faster elsewhere and with Easter falling later this year, it may help overall retail sales growths.”


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