Non-food inflation drops 0.6% – the first time since the VAT reversal – as retailers drive footfall with promotional activity over the Easter period.
Overall shop price inflation slowed in March to 1.2% from 1.7% in February. Non-food inflation slowed to 1.3% in March from the 1.9% reported in February, while food inflation slowed to 1.2% - down marginally from 1.3% in February.

British Retail Consortium director general Stephen Robertson said: "This is great news. Food inflation has fallen to its lowest for over three years and overall shop price inflation is the lowest since November. Non-food inflation fell for the first time since VAT returned to 17.5%.

"The competitive battle is even fiercer than usual as retailers fight it out to overcome the reluctance of customers to spend caused by pre-election uncertainty. Falling shop price inflation is particularly welcome relief for consumers as they face sharp rises in other living costs, such as fuel."

Asda's Income Tracker revealed yesterday that Brits' discretionary income took a hit again in February, with the average UK family £6 a week worse off than in the same period last year. The cost of transport put a lot of pressure on households, with petrol prices up 23.3% and diesel up 12.9% in February 2010, compared with a year ago.

Nielsen senior manager, retailer services Mike Watkins said: "Downward pressures on pricing continue to impact all channels caused this month by a slowdown in ambient food prices as well as non-food prices. Retailers have needed to drive footfall with increased promotional activity pre-Easter and also to compensate for the increase in VAT. Overall the consumer remains cautious about spending."