Shop prices fell by -2.4% in February (below January’s decrease of -2.2%) – the lowest deflation rate since May 2020 – reports BRC-Nielsen.
However, non-food prices fell by -3.9% (-3.6% in January), the fastest rate of decline since May 2020.
Helen Dickinson OBE, chief executive, BRC, says: “Prices in February fell, driven by a drop in non-food prices. With the third lockdown constricting consumer spending across all income brackets, many retailers have been vigorously discounting products in an attempt to encourage additional spending. Meanwhile, despite Brexit-related costs, food inflation remained steady thanks to fierce competition between grocers to maintain their market share amidst declining incomes for some UK households.
“However, consumers could face higher prices in the future as a result of rising global food prices, shipping costs, and Brexit red tape. Many retailers are already under great financial strain due to ongoing forced closures and restrictions, and some will not be in a position to continue to absorb all of these added costs. It is vital Government uses the Budget today to ease cost pressures on retailers by extending targeted business rates relief for the worst-hit businesses, extending the moratorium on aggressive debt enforcement and lifting the EU state aid limits on lockdown grants. Otherwise, retailers will struggle to continue to provide the competitive prices their customers are used to.”