April fall in prices marks five years of deflation

Shop prices fell 1% in April to mark five years of deflation, figures show.

The overall drop in prices into last month represents the deepest period of deflation since February last year as upward pressure from the fall in the pound weakened, according to the BRC-Nielsen Shop Price Index.

The price of non-food items decreased further at a rate of 2.2% compared with March's 1.9% fall, but food inflation picked up to 1% from 0.4% a month earlier on the back of higher global commodity prices.

Fresh food prices rose by 0.9% after three consecutive months of slowdown, up from 0.3% in March, while ambient food inflation accelerated to 1.2% from 0.6% the month before.

British Retail Consortium chief executive Helen Dickinson 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."

Mike Watkins, head of retailer and business insight at Nielsen, said: "With weak consumer demand, any success in sales performance is coming at the expense of retailers' 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 are not yet feeling better off."

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