Shop price inflation in the UK decelerated by 0.4% in April, from 0.9% in March, according to data from the latest BRC-Nielsen Shop Price Index.
Food inflation was down to 2.2% in April, compared to 2.5% in March, however, this figure is above the 12-month and six-month average price increases of 1.7% and 1.8%, respectively.
Ambient food inflation slowed to 3.2% in April, from 3.4% in March. This is the second-highest inflation rate since April 2013, with the highest recorded in March 2019.
The price of non-food items fell by 0.6% in April, compared to March, when the prices were flat.
Promotional Activities
The slowdown in inflation has been attributed to a significant pickup in promotional activities by retailers.
The highest growth in promotions was observed in the clothing and footwear category, followed by DIY and fresh food.
There has also been a significant shift in promotional behaviour, with retailers adopting a ‘depth for breadth’ approach, offering more lines on promotion, with shallower price cuts.
The number of food and non-food discounted product lines doubled when compared with the same period in 2018, the survey revealed.
Potential Impact
Commenting on the trend, Helen Dickinson OBE, chief executive of the British Retail Consortium, said, “Intense competition may be benefitting consumers, but [it] is cutting into the already slim margins of retailers.”
“In order to be successful, retailers must invest in both their physical and digital offerings, to ensure they can provide the customer experience consumers want. However, investment comes at a cost, and unless the government acts to reform the broken business rates system, we may find more store closures and job losses on the horizon,” Dickinson added.
Cautious Consumers
According to Mike Watkins, head of retailer and business insight at Nielsen, the slowdown is welcome news for shoppers, but many households are still cautious about spending.
“We anticipate promotions continuing over the summer months to help the momentum in retail sales, which was kick-started by the late Easter and some warm weather,” Watkins said.
© 2019 European Supermarket Magazine – your source for the latest retail news. Article by Dayeeta Das. Click subscribe to sign up to ESM: European Supermarket Magazine.
