Procurement · 12 April 2018

Food price inflation falls again to 1%

Fresh food inflation slowed to the lowest rate since March 2017.

Food inflation fell to a 12-month low in March giving a much-needed boost to hard-pressed consumers.

The BRC-Nielsen Shop Price Index revealed that shop price deflation deepened to 1 per cent in March from 0.8 per cent in February. That means that shop prices have been deflationary for 59 months now marking the deepest deflation since February 2017.

The deflation in non-food prices eased during the month with prices decreasing at a rate of 1.9 per cent compared to February when prices declined by 2.2 per cent.

Meanwhile food inflation slowed down substantially in March with inflation standing at 0.4 per cent, down from 1.6 per cent in February. Again, this is the lowest food inflation rate since February last year.

Fresh food inflation slowed to the lowest rate since March 2017 with prices rising by 0.3 per cent compared to 0.9 per cent in February. Ambient food prices rose by 0.6 per cent down from 2.5 per cent in February.

Helen Dickinson, chief executive of the British Retail Consortium, said: “Shop price deflation accelerated in March, driven by a substantial slowdown in food inflation, which reached its lowest rate for a year.

“As the impact of the pound’s depreciation one year on are beginning to fizzle out, retailers are passing the positive impact through to the shop floor.

“So, some welcome respite for consumers, particularly with the gap between inflation and wage growth finally narrowing. But with further wage increases on the horizon putting upward pressure on prices, consumers will continue to feel the grip on their spending power.”

Dickinson added that the support for a zero-tariff trade deal on the end-status Brexit agreement between the EU and UK, is encouraging news for retailers.

But, she warned that this needs to be accompanied by a focus on reducing potential customs friction on the movement of goods, in order for retailers to mitigate any further pressure on prices for their customers.

Mike Watkins, head of Retailer and Business Insight, Nielsen, said the figures will put pressure on supermarkets and retailers to react.

Nielsen said: “Consumers are still coping with falling disposable incomes and non-food retailers are having to keep price increases to a minimum or make further price cuts, as consumer demand has been weak since the start of the year,” he said.

“With inflationary pressure receding in the food supply chain, we can now expect supermarkets to focus on lowering prices and to use promotions to drive visits as part of the battle for gaining share of wallet.

“With 27 per cent of the value of the shopping basket being discounted by offers or short-term price cuts, which is a 10-year low, shoppers will take advantage of any increase in discounting as they seek out the best value for money.”

 

Rising food and fuel costs put key UK sectors under pressure

Sign up to our newsletter to get the latest from Business Advice.


 
TAGS:

ABOUT THE EXPERT

Carly Hacon is a reporter for Business Advice. She has a BA in journalism from Kingston University, and has previously worked as a features editor for a local newspaper.

Q&A

If you’ve found the article above useful, but have a more detailed and bespoke question, then please feel free to submit a query to our expert. We at Business Advice will get in contact with them on your behalf and arrange for a personalised response. These questions and answers will then be collated on the site for any other readers who have similar queries.

Ask a question

Tax & admin