Shop prices in the UK fell by 0.6% in February, compared to a 0.3% decline in January, according to the latest data from the BRC-Nielsen Shop Price Index.
The price of non-food items dropped 1.9% during this period, below the 12-month average of 1.2% and the six-month average of 1.6%.
According to BRC chief executive, Helen Dickinson, the decline in shop prices was driven by weak consumer demand and intense competition, which led many retailers to extend their January sales.
She added, "Consumers will welcome the fall in shop prices, which accelerated from the previous month, with non-food prices falling at their highest rate since May 2018."
Food inflation remained steady at 1.6% during this period, while fresh food inflation eased to 0.6% from 0.7% in January.
In the ambient food segment, inflation accelerated to 3.0% in February from 2.8% in the previous month.
Dickinson commented, "Some non-perishables, such as cereals, have caused overall food prices to rise. This is likely to worsen as global food prices have been growing at a double-digit rate for the past three months."
According to Mike Watkins, head of retailer and business insight at Nielsen, the slight increase in food prices will not affect the shopping behaviour of consumers as they are already spending cautiously.
Watkins added, "If consumer price inflation increases further over the next few months and if sales growths remain weak, then more retailers may need to compensate with extra promotions and deeper price cuts."
Pressure On Retailers
Dickinson also pointed out that UK retailers are facing pressure arising from expenses on business taxes, the apprenticeship levy, and rising wages.
"The upcoming Budget presents an excellent opportunity to address the broken business rates system, starting with transitional relief, which has forced retailers to subsidise other industries by nearly £500 million since 2017," she said.
© 2020 European Supermarket Magazine – your source for the latest retail news. Article by Dayeeta Das. Click subscribe to sign up to ESM: The European Supermarket Magazine.