Non-food prices up for the first time in over a year showing consumer demand is strengthening

According to the British Retail Consortium (BRC)- Nielsen Shop Price Index, overall shop price inflation jumped to 1.4%, its highest rate since December.

Food price inflation remained flat for the second month in a row in March, at 3.5%.

BRC director general Helen Dickinson said the increase in non-food prices was driven by gradual growth across a number of categories.

Inflation across the health and beauty category accelerated while the electricals and clothing and footwear categories both reported a deceleration in their deflation rates.

The BRC said clothing prices may begin to rise due to the steady increase of cotton prices which are currently up 16% since the start of the year.

Meanwhile the overall inflation increase was driven by lower levels of discounting due to tighter stock controls over Christmas.  

“It bears out anecdotal evidence that demand is strengthening and promotions are less widespread than last year,” Dickinson said.

“Next month will be the ‘one to watch’. It’ll be interesting to see if the prolonged unseasonably cold and wet weather leads to deeper discounting on Spring lines for some retailers.”

Food prices stayed at the same level due to a fall in prices across tinned and packet goods, which has balanced out a fresh food price rise.

Nielsen head of retail and business insight Mike Watkins said: “With cold weather in March holding back spending across many channels, price reductions have been needed to stimulate demand for food and there was also an increase in price competition at the supermarkets due to Easter promotions, keeping overall food inflation stable.”