Shop Prices Mark Third Year Of Falls

Shop prices have now fallen for three years in a row giving a boost to consumers but putting UK business profits at risk.
The British Retail Consortium-Nielsen Shop Price Index in April revealed that overall shop prices reported deflation of 1.7%, unchanged from the decline seen in March. Non-food deflation accelerated to 2.9% in April from the 2.6% fall in March.
Food returned to inflationary territory, up 0.1% compared with the 0.4% decline in the previous two months.
“This month marks an important anniversary for retailers and shoppers alike. We’ve seen three years of consecutive falling shop prices driven by intense competition across the industry,” said Helen Dickinson, BRC’s chief executive. “It has knock on implications for margins and profitability given the combination of continued investment in digital and rising cost pressures. 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. Hopefully today’s anniversary of falling prices will be a strong remedy to consumer confidence which has weakened significantly since the beginning of the year.”
Mike Watkins, head of Retailer and Business Insight, Nielsen added: “The underlying trend in shop prices is downwards with continued price cutting by Supermarkets which is driving deflation. Further discounts may also be necessary on the high street as the cool spring has impacted the sales of many retailers, and an increase in the levels of promotion over the next few weeks to drive footfall is not out of the question.”