Food prices fall for fifth consecutive month with no bounce on the horizon

• Overall shop price deflation in May of 1.9%
• Annual food deflation remains at 0.9%
• Non-food deflation stays at 2.5%

The latest BRC-Nielsen Shop Price Index, published today, revealed that the overall Shop Price Index registered deflation of 1.9% in May, which is unchanged from the previous month. Annual food deflation remained at 0.9%, while non-food deflation stayed at 2.5%.

It is the 25^th consecutive month of falling shop prices.

The BRC said that low-priced fresh food had kept prices down despite a small rise for ambient food. The index revealed last month that a third of grocery spend is now on promotions.

All the big four grocers have felt the pain, witnessing margins narrow and being forced to cut costs from their businesses.

In non-food, deflation in furniture and floor-coverings accelerated sharply, to its lowest rate since last December, the BRC said.

Mike Watkins, head of retailer and business insight for Nielsen, said today: “Retailers continue to use price cuts and promotions to stimulate sales which is helping to maintain shop price deflation, and we see little evidence to suggest that prices will rise in the near future.

“With many food retailers still using price cuts to attract new shoppers, this is lowering the cost of the weekly shop and so the overall CPI figure in the UK. Deflation and price led competition will continue to be a key driver of sales growth for some time yet.”  

Last month, the UK officially entered a period of deflation, the first time since records began.