Overall shop prices reported deflation of 1% in February, a sharp deceleration from the 1.7% fall in January, reports the latest BRC-Nielsen Shop price Index. Non-food deflation decelerated to 1.8%, an easing from the 2.3% decline in the previous month.

Helen Dickinson OBE, BRC chief executive, says: “Shop prices in February were 1% lower than the same month last year, continuing a trend of YoY price falls that has lasted nearly four years. However, it is clear that the significant underlying cost pressures, which have been building over the last year are beginning to filter through into shop prices.

“For the time being, consumers continue to benefit from an annual fall in non-food prices, which were down 1.8% on the previous year. However, the rate of deflation has eased considerably from a monthly perspective, which can be explained in part by an end to the promotional activity in January, after a weak festive sales performance in some non-food categories. 

“Looking further ahead, retailers, who operate in a highly competitive market with narrow margins, will be increasingly hard pushed to protect their customers from the inevitable impact of these rising cost pressures. We can therefore expect this impact to start manifesting in shop prices over the course of the year.”