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Shop prices slide lower in February amid further discounting

Simon Neville, PA City Editor
·2-min read

Shop prices continued to fall last month at a faster rate than January, according to new data.

The closely followed British Retail Consortium (BRC)-Nielsen shop price index found prices were down 2.4% last month – below the 12 and six-month average price decreases of 1.7% and 1.8% respectively.

February prices fell further than the 2.2% drop in January, pushed primarily by non-food prices, which were down 3.9% compared with a decline of 3.6% in January, the survey found.

Food inflation was steady at 0.2% in February – the lowest inflation rate for the category since January 2017.

Within groceries, fresh food prices dropped for a third month in a row, with prices down 0.8% – matching falls in January – and ambient food inflation slowed to 1.6% in February, down from 1.7% in January.

Coronavirus – Tue Jan 12, 2021
Food inflation was steady at 0.2% for the month, according to the data (Dominic Lipinski/PA)

BRC chief executive Helen Dickinson said: “Prices in February fell, driven by a drop in non-food prices.

“With the third lockdown constricting consumer spending across all income brackets, many retailers have been vigorously discounting products in an attempt to encourage additional spending.

“Meanwhile, despite Brexit-related costs, food inflation remained steady thanks to fierce competition between grocers to maintain their market share amidst declining incomes for some UK households.

“However, consumers could face higher prices in the future as a result of rising global food prices, shipping costs, and Brexit red tape.

“Many retailers are already under great financial strain due to ongoing forced closures and restrictions, and some will not be in a position to continue to absorb all of these added costs.”

She added that it was vital for the Government to use the Budget today to ease cost pressures on retailers by extending targeted business rates relief for the worst-hit businesses.

Mike Watkins, head of retailer and business insight at Nielsen, said shoppers are looking to stretch their budgets, which is helping prices stay low.

He added: “With the national lockdown continuing, prices across fashion and clothing retailers continue to fall ahead of the anticipated reopening of stores in April.”