Shop prices continue to fall in April but cost of food edges up

Overall shop prices, including food and non-food, dipped 1.7% in April compared with the previous year, marking three years of continuously falling retail prices according to the BRC-Nielsen Shop Price Index.

It was the second consecutive month that prices had fallen 1.7%, the lowest recorded reduction since August 2015.

Non-food prices saw the 37th consecutive month of deflation, with prices falling 2.9% last month year on year, ahead of the 12-month average of 2.7% and driven by a 7.1% slump in clothing and footwear prices.

Overall, food prices edged up 0.1% due to a 1% rise in ambient food prices, up from a 0.4% rise in March and above the 12-month average of 0.8%.

Fresh food prices decreased 0.5% in April, slowing from a 0.9% decline the previous month.

Nielsen head of retailer and business insight Mike Watkins said: “Whilst some food prices have stabilised this month, this is partly due to external factors, and will probably be short-term.

“The underlying trend in shop prices is downwards, with continued price-cutting by supermarkets, which is driving deflation.”

British Retail Consortium (BRC) chief executive Helen Dickinson added: “The 36 consecutive months of price falls is being driven by intense competition across the industry. It has knock-on implications for margins and profitability given the combination of continued investment in digital and rising cost pressures, compounded by recent policy announcements.

“Ensuring they do not pass on these cost increases, alongside the intensity of competition in the market, are the principal reasons why retailers continue to respond to their customers’ demands for value.”