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Prices fall as shoppers enjoy special offers on a third of their groceries

6th May 2015


Prices in shops have fallen by 1.9% on average in the year to April,  down from a drop of 2.1% in the year to March.

The BRC-Neilsen index shows that annual food price deflation was 0.9% for the second month in a row, while non-food deflation decelerated to 2.5% in April from 2.8% in March.

On a 12-month average basis, the Shop Price Index reported deflation of 1.7%.

BRC director general, Helen Dickinson, says: “Food prices remained at their record low for a second consecutive month with both fresh and ambient food helping to keep prices down. This means that for five out of the last six months food prices have fallen.

“The falling prices of non-food goods slowed down very slightly, whilst offering up great deals in clothing, electricals, books, stationery, home entertainment, DIY, gardening and hardware. April saw the 24th consecutive month of falling shop prices and the 25th consecutive month of falling non-food prices. These trends help to illustrate how retail has helped the consumer keep the cost of living down in recent years.

She adds: “There’s evidence to show that around a third of grocery spend is now on promotions, helping millions of shoppers across the country enjoy the benefits of low prices and special offers together with advice from retailers on preventing food waste. Recent research has shown that, with the exception of fruit and vegetables, food prices in British supermarkets are on average seven per cent lower than the Eurozone average.

“Wider macro-economic data continues to be broadly positive. The consumer price index remains at zero, an historic low, while revised consumer confidence figures remain high. Retailers will begin to feel the effects of oil prices creeping up again but at their present level (roughly $66 a barrel) costs of production will be down. It helps too that staple commodities such as wheat, corn and soybean prices are somewhere between a quarter and a third lower than they were this time last year.

Dickinson says she hopes that following tomorrow’s election, the new government notes today’s figures as  indicative of an important story from the last few years.

“Despite the low margins in a fiercely competitive market retailers have kept prices down and in doing so made sure the public are able to see their wages go that little bit further during a difficult period. That help is set to continue,” she says

Mike Watkins, head of retailer and business Insight at Nielsen, says: “Shoppers are still seeing lower prices than this time last year and food prices have fallen for four consecutive months, with the supermarket price wars expected to continue. There is little external pressure on food or non-food prices and CPI is also at a historic low point, so this is good news for consumers.

“However, the challenge for retailers is that despite consumer confidence being back to pre-recession levels, many households are still cautious about spending, and for those with more disposable income, some appear to be spending a little more outside of retail, for example on leisure and entertainment. So we anticipate promotions continuing over the summer months to help the momentum in retail sales.”

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