Retail price competition dampens commodity rises, says British Retail Consortium

DIY/gardening and hardware prices fell -1.4% in March compared to March 2016 and were +0.2% against February 2017.

February 2017 prices were also -0.4% compared to February 2016.

Overall shop prices reported deflation of 0.8% in March from the 1.0% fall in February. This is the shallowest deflation rate since December 2013. Non-food deflation accelerated to 2.0% in March from the 1.8% fall in February.

Food inflation accelerated to 1.0% in March, up from the 0.8% fall in January. This is the sharpest inflationary rise since February 2014.

BRC chief executive Helen Dickinson said: "Global food commodity costs have risen by 17% on average over last year’s figures, building substantial pressure in the food supply chain.

"Although UK food shop prices are seeing their steepest rise this month for over two years, the increase is still only 1%, reflecting the continuing intense competition between retailers. The limited increase is even more impressive, given the magnitude of the devaluation in sterling.

"The picture in non-food prices is also positive for consumers. Customers have now had the benefit of four years of non-food price deflation which increased to a 2% fall in prices year on year in March.

"Looking across both food and non-food, shop prices in total have been falling for 47 consecutive months. Other factors outside of retail shop prices continue to be the main drivers of CPI rising faster than expected, for the moment at least. The squeeze on household disposable incomes will tighten as the year progresses.

"Looking ahead, ensuring the continuation of value for consumers through tariff-free trade must be at the heart of plans for a smart Brexit.

Nielsen business and insight head Mike Watkins said: "Inflation is gaining momentum across the economy but in food retailing, the cost price increases being passed onto shoppers in March was lower than the Consumer Price Index and in the Non-Food channel there is still deflation.

"We anticipate this trend to continue over the next few months. If so, this would be good news for shoppers managing household budgets when prices are rising faster elsewhere and with Easter falling later this year, it may help overall retail sales growths."  


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