Shop price inflation in April drops to lowest level in more than three years

Overall inflation fell sharply from 1.4% in March to 0.4% in April, the lowest rate since November 2009.

Food inflation dropped from 3.5% in March to 2.9% in April, driven by slowing inflation in the fresh and ambient categories, its lowest rate since July 2010.

Non-food prices “returned to deflationary territory”, down 1% after a 0.2% rise in March, according to the BRC-Nielsen Shop Price Inflation index. It was the second deepest deflation rate since November 2009 for non-food.  All sub-categories contributed to the slowing overall rate. 

British Retail Consortium director-general Helen Dickinson said: “Household finances are still under pressure but it’s clear that isn’t coming from the shops. In April, overall shop price inflation was sharply down on the previous month, to its lowest for three and a half years, as a result of retailers working harder on promotions to encourage customers and the easing of some commodity costs.

“In particular, price competition on non-food goods intensified in the face of average incomes rising at their slowest for more than a decade and poor demand for seasonal products. Spring lines, in fashion and gardening for example, have not taken off in the way they did last year because warmer weather has been much more reluctant to take hold. 

“Food inflation slowed in April, for fresh as well as tinned and packet items, thanks to promotional activity and falls in a number of key costs working through. 

“The big drop in overall shop price inflation has given us the largest gap for over a year between the SPI and the wider Consumer Price Index, which includes energy and housing costs.” 

Mike Watkins, head of retailer and business insight at Nielsen, said: “The good news for shoppers is that, aside from some seasonal price changes, there is a trend of price reduction in many food categories and price deflation in non-foods.

“This time last year, food prices were on the increase during the washout of early summer 2012. Retailers will now be looking to keep prices competitive over the next few weeks to keep whatever momentum there is in sales growth going, and for high street retailers this could require summer discounts to start sooner rather than later.“