Shop prices fell in March driven by falling non-food prices and easing food inflation, but BRC boss Helen Dickinson warns that grocery prices may rise amid seasonal shift and increased demand.

Food prices fell 0.8% in the period from March 2 to March 6, marking a steeper rate of decline than the 0.6% fall recorded in February by the BRC-Nielsen Shop Price Index.

This fall was also steeper than the six- and 12-month averages of 0.5% and 0.3% respectively.

Non-food prices fell 1.9% in March, marking the steepest rate of decline since May 2018.

Food inflation also eased in the month to 1.1%, down from 1.6% in February and below the 12- and six-month averages of 1.6% and 1.4% respectively.

This fall was spurred by fresh food inflation easing for the third consecutive month, down to 0.4% in March, compared with 0.6% in February.

Because these metrics were taken before coronavirus significantly impacted retailers’ trading and consumers’ shopping habits, it is likely that the shop price difference between grocery and non-grocery lines will become increasingly pronounced in the coming weeks.

BRC chief executive Helen Dickinson said: “There are a number of price pressures arising from the coronavirus crisis. Food prices, particularly of fresh produce, may be impacted by higher costs on seasonal farm labour, while non-food prices will be pushed down by lower demand.

“It is likely that the combination of future economic uncertainty and job losses, whether realised or potential, will drive people to reconsider their spending patterns and to save more. As a result, it is vital the government monitors the situation carefully and is ready to continue taking bold action where necessary to support jobs and businesses.”

Nielsen head of retailer and business insight Mike Watkins added: “The weak demand for many goods and services means non-food retailers continued to battle hard for consumer spending by keeping prices down wherever possible. And across supermarkets the recent upwards pressure on food prices slowed a little in March, with a slowdown in the rate of inflation in both ambient and fresh foods.”