Shop price inflation fell to 1.3% in April from 1.5% in March but the British Retail Consortium (BRC)- Nielsen Shop Price Index flagged potential future increases following the UK’s fall back into recession.
The rate of non-food deflation was 0.5% in April, as clothing, footwear, electricals and furniture all drove downward pressure as retailers continued to use promotions to increase sales.
BRC director general Stephen Robertson said: “After last week’s official return to recession, these figures give customers some reasons to be cheerful. Fuel, utilities and even stamps are much more expensive than they were but retailers are holding back or actually cutting prices.
“Food inflation dropped to where it was before March’s sudden rise and non-food goods have now been cheaper than a year ago for three months in a row.”
The price of oil is also still an inflation threat.
Nielsen senior manager of retailer services Mike Watkins said: “Retailers promotional spend on offers remains high at 35% of sales in supermarkets, which is a similar level to this time last year when inflation was increasing and consumer confidence had weakened. So, to help shoppers manage household budgets, retailers continue to promote heavily and this provides further savings.”
The BRC reported that the UK’s return to recession is likely to damage business and consumer confidence.
The organisation said: “The reality of retailers passing on rising costs from business rates, distribution costs and from manufacturers remains unlikely. This pincer movement of rising costs and promotion-driven demand is biting into margins.”