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April's fall in prices marks five years of deflation

Published: 9 May 2018 - Kiran Grewal

Shop price deflation held at 1.0% in April. Shop Prices have been deflationary for 60 months now and this is the deepest deflation since February 2017.

Deflation in Non-Food prices was deeper in April than in March: prices decreased at a rate of 2.2% compared to March when prices declined by 1.9%.

 

Chief executive of the British Retail Consortium, Helen Dickinson OBE said: “Overall, shop prices continued to fall in April, representing the deepest period of deflation since February last year. The upward pressure on prices from the fall in the pound is weakening, leaving underlying commodity prices and strong competition for customers the key influences on inflation.

“Higher global commodity prices than last year pushed food price inflation upwards in April. On the other hand, non-food prices sunk further into deflation as retailers continue to respond to the squeeze on households’ discretionary spending by offering low and falling prices.

"As negotiations on Brexit continue to play out against this backdrop the importance of addressing the issue of frictionless movement of goods across borders is increasing. Retailers must have clarity on this position if they are to continue to provide a wide range of goods for consumers at affordable prices."

Head of retailer and business insight at Nielsen, Mike Watkins commented: "With weak consumer demand, any success in sales performance is coming at the expense of retailer’s margins, with lower prices in non food and inflation now hovering around 1% in food stores.

“Recent industry data suggests poor footfall and with unseasonably cool weather punctuated by a brief hot spell, sales momentum has been hard to sustain. So whilst promotional activity continued after Easter, retailers are still keeping prices competitive to tempt shoppers back into store as consumers not yet feeling better off."

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