Annual UK shop price inflation cooled to 1.3% in March, marking the lowest level since December 2021, according to the latest British Retail Consortium-NielsenIQ index. The reading undercut the three-month average rate of 2.2%, signaling a continued easing of inflationary pressures in the retail sector.
The non-food inflation rate fell sharply to 0.2%, down from 1.3% in February, while food inflation decelerated to 3.7%, the lowest since April 2022. This represented the tenth consecutive month of slowing price growth in the food category, with fresh food inflation easing to 2.6% and ambient food inflation decelerating to 5.2%.
Mike Watkins, head of retailer and business insight at NielsenIQ, attributed the slowdown to the base effect, noting that food inflation had stood at a staggering 15% a year ago. “This was to be expected,” he commented.
Helen Dickinson, chief executive of the British Retail Consortium (BRC), pointed to the intense competition among retailers as the driving force behind the falling prices. “Retailers continued to compete fiercely to bring prices down for their customers,” she said.
While Easter treats remained more expensive due to elevated global cocoa and sugar prices, Dickinson highlighted the “cracking deals” offered by retailers on popular chocolates, leading to month-on-month price declines. Additionally, dairy prices fell as farmgate prices eased, and retailers worked diligently to lower costs for many essential items.
In the non-food segment, Dickinson noted price drops for electronics, clothing, and footwear as retailers ramped up promotions to stimulate consumer spending.
The moderation in shop price inflation provides a much-needed respite for consumers grappling with the broader cost-of-living crisis. However, with food prices remaining stubbornly high and uncertainties surrounding the global economic outlook, the path to sustained price stability remains challenging.
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