Supermarkets spare shoppers the pain as food prices edge upwards

Competition between supermarkets is helping to keep price rises down

Updated: 

Food prices are edging upwards but competition between supermarkets is shielding shoppers from cost increases for the time being, figures show.

See also: How does your household food spend compare?

See also: Think you've cut the cost of shopping? Have you tried this?

See also: M&S study shows bigger packages aren't always better value

Overall, shop prices are 1% lower than last February, continuing a trend that has lasted almost four years, the BRC-Nielsen Shop Price Index shows.

However, the figure is a sharp deceleration from the 1.7% fall in January, while food showed inflation of 0.4% in February - the first inflationary rise since April last year.

Non-food deflation decelerated to 1.8% in February, an easing from the 2.3% decline in January.

British Retail Consortium chief executive Helen Dickinson said: "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.

"Global food prices were on average 16% higher at the beginning of this year compared to last, whilst over the same period the value of the pound fell around 15%.

"Despite this, February saw an increase of just 0.4% in the prices of food sold in shops, proving retailers' resilience in managing to largely shield consumers from cost increases.

"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."

Nielsen's head of retailer and business insight, Mike Watkins, said: "Whilst food inflation has returned, the competition between retailers means that price increases passed onto consumers in February were relatively small and there were also some seasonal and weather-related increases.

"Non-food prices remain deflationary and, in part, this reflects the structural change under way in non-food retailing.

"At the moment, consumer sentiment around spending intentions is strong so we don't anticipate any significant change on retail spend over the next few months even if shop price inflation gains more momentum."

Save money on shopping: ten great tricks

Save money on shopping: ten great tricks