Retail prices fall for 34th consecutive month as food deflation returns

Last month food prices dropped 0.4% year on year, after rising 0.1% in January.

On a month by month basis, food prices fell 0.6% in February compared to a 0.7% rise in January, representing the largest monthly decline since July 2014, according to the British Retail Consortium (BRC) Nielsen Shop Price Index.

Clothing and footwear prices dropped 6.9% year on year, the sharpest decline since April 2015 when deflation hit 7.2%.

Prices across furniture and floorcoverings fell 1.7%, the steepest deflation rate since September 2015.

Deflation in the DIY sector hit 3% whilst prices fell 3.5% in electricals.  In books, stationery and home entertainment, prices fell by 3.9%.

BRC chief executive Helen Dickinson said: “The move back into deflationary territory in the food category confirmed that last month’s marginal rise was just a blip.

“With consumer confidence falling back and wage growth remaining subdued, retailers continue to support their customers with prices and promotions to maintain market share in the tough trading environment.”

Nielsen head of retailer and business insight Mike Watkins added: “Getting a larger share of the wallet of shoppers continues to a challenge for many food and non-food retailers and competition remains intense on the high street.

“Food prices continue to fall as supermarkets are working hard to stimulate sales with price cuts rather than multi-buy promotions, and this is leading to continued deflation in food. With uncertain market conditions, offers and discounts are likely to continue for the time being.”