Shop prices fall further but experts warn virus could drive food inflation

Shoppers saw the price of goods fall further in March on the back of slowing food inflation, although experts have warned that the impact of coronavirus could push prices higher.

The latest BRC-Nielsen Shop Price index for March revealed that UK shop prices fell 0.8%, accelerating from 0.6% deflation in February.

The figure, which was taken in the first week of March, was driven by a significant slowdown in food inflation.

Food prices rose by 1.1%, down from 1.6% growth in the previous month, as the price of fresh food grew by 0.4%, down from 0.6% growth in February.

The price of ambient food, such as tinned products and other store-cupboard items, grew by 2% as it slowed from 3% growth in February.

Meanwhile, non-food prices fell by 1.9% in March, in the highest rate of decline since May 2018.

Mike Watkins, head of retailer and business insight at Nielsen, said: “The weak demand for many goods and services means non-food retailers continued to battle hard for consumer spending by keeping prices down wherever possible.

“And across supermarkets, the recent upwards pressure on food prices slowed a little in March, with a slowdown in the rate of inflation in both ambient and fresh foods.”

Meanwhile, Helen Dickinson, chief executive of the British Retail Consortium, said there are price pressures arising from the pandemic.

She said: “Food prices, particularly of fresh produce, may be impacted by higher costs on seasonal farm labour, while non-food prices will be pushed down by lower demand.

“It is likely that the combination of future economic uncertainty and job losses, whether realised or potential, will drive people to reconsider their spending patterns and to save more.

“As a result, it is vital the Government monitors the situation carefully and is ready to continue taking bold action where necessary to support jobs and businesses.”