Shop price inflation deflated for the eleventh consecutive month in March, dropping 1.7%, as retailers kept their prices sharp amid stiff competition.
This is the deepest level of deflation since records began in 2006, and compares with a 1.4% drop in February, according to the BRC-Nielsen Shop Price Index
Within the March data, food prices increased 0.8% – a record low. Non-food prices slumped 3.2%, also the lowest ever recorded.
British Retail Consortium director general Helen Dickinson said: “Retailers have rightly been getting recognition for their contribution to the economic recovery, including good news recently on apprentices and training. But keeping costs down for ordinary people is just as important. And that’s why the continuing deflation we are seeing in shop prices is such good news for consumers.
“It’s strong industry wide competition as retailers vie for a share of limited spending capacity that is driving this record breaking run. Retailers have been responding to their customers with keen prices and promotions to maintain market share, and March saw the deepest deflation for eight years and the lowest inflation ever recorded for food. With food and drink representing 15% of disposable income for the least affluent third of households, retail’s significant contribution to maintaining standards of living is clear.”
Within food, fresh food inflation decreased to 0.6% from 1.5% in February. Downward pressure came from the fish and vegetables categories.
Within ambient food, inflation rose to 1% from 0.4% in February after bread, cereal and non-alcoholic drinks prices increased after reporting deflation in February.
In non-food, clothing and footwear reported their deepest level of deflation ever recorded by the index.
Dickinson added: “The outlook on commodity prices shows some upwards pressures. So, while we know retailers will be working hard to sustain these low prices, continued support from Government on other costs such as business rates reform and the recent reliefs for National Insurance Contributions will be key to maintaining this positive trend.”