'Three Years Of Shop Price Falls A Remedy'

A retail industry body is hoping the third anniversary of falling shop prices will prove a "strong remedy" to consumer confidence.

The British Retail Consortium (BRC)/Nielsen Shop Price Index for April measured annual store deflation at 1.7% - unchanged from the previous month.

It (Other OTC: ITGL - news) marked, they said, three years of falling overall prices at UK stores driven by the effects of low inflation, the supermarket price war and weak demand.

The report pointed to heavy discounting in the fashion sector ahead of the summer season, with clothing and footwear prices falling 7.1% as stores moved to lure shoppers into purchases at a time of cooler weather.

Overall non-food deflation accelerated to 2.9% - with the BRC suggesting bargains were to be had in electricals, furniture and floorcoverings too.

Food prices rose by 0.1% though fresh goods saw a price decline of 0.5%.

The BRC said overall deflation was being driven by intense competition for business and it hoped the anniversary would drive footfall and sales higher.

Its chief executive, Helen Dickinson, said of the price deflation: "It has knock on implications for margins and profitability given the combination of continued investment in digital and rising cost pressures, compounded by recent policy announcements.

"Ensuring they do not pass on these cost increases, alongside the intensity of competition in the market, are the principal reasons why retailers continue to respond to their customers' demands for value."

She (Munich: SOQ.MU - news) added: "Hopefully today's anniversary of falling prices will be a strong remedy to consumer confidence which has weakened significantly since the beginning of the year".

A string of retailers, particularly in the fashion sector, have reported weak trading - with many reporting struggles since Christmas.

Mike Watkins, head of business insight at Nielsen (EUREX: 11400372.EX - news) , said: "Further discounts may also be necessary on the high street as the cool spring has impacted the sales of many retailers, and an increase in the levels of promotion over the next few weeks to drive footfall is not out of the question".