Falling food costs helped shop price inflation ease to its lowest level in more than two years, figures show. The British Retail Consortium (BRC), which represents supermarkets, said the rate at which prices were rising had almost halved to 1.3% in March – down from 2.5% in February.
But it said Easter treats remained more expensive than in previous years because of high cocoa and sugar prices. It is the tenth month in a row food price inflation has fallen.
Overall, food prices are 3.7% higher than they were a year ago, down from 5% in February, the BRC said.Inflation on goods other than food fell to 0.2% in March, down from 1.3% a month earlier. Overall price inflation in the UK, the rate at which prices rise, is currently 4%, meaning the cost of living is 4% more expensive on average compared with last year.
The BRC said retailers had competed “fiercely” on deals, especially in the lead up to Easter. Prices for dairy products and chocolate were lower in March, while price tags on electrical goods, clothes and shoes also dropped as a result of promotions.
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However, the industry trade body’s chief executive Helen Dickinson told the BBC’s Today programme that although high commodity prices caused by global shocks had largely eased, consumers should not expect to see a return to pre-pandemic prices.We won’t see significant falls in prices back to pre-Covid levels, to do that would require deflation that we haven’t seen since the (1930s) Great Depression,” she said.
Other costs associated with wages, energy and other commodities were “baked in”, which Ms Dickinson said could threaten the downward inflationary trend, along with changes to regulations and post-Brexit border checks.
“These costs include a 6.7% business rates rise, ill-thought-out recycling proposals, and new border checks – all at the same time as the largest rise to the National Living Wage on record,” she said. “The risks are on the upside as we move into the second quarter of the year.”
The minimum wage set by the government, known as the National Living Wage, increased by more than £1 for the first time, providing a boost for 2.7 million low-paid workers.
The wage rate rose on 1 April from £10.42 to £11.44 for over-21s.In preparation for the new minimum wage, many supermarkets, including Tesco, Sainsbury’s, Asda, Aldi, Lidl and M&S increased pay for staff outside of London to £12 per hour, with competition to attract staff remaining fierce.
“The labour market is still really tight, there are still over 100,000 vacancies across the retail industry and that’s not just within stores, that’s within head offices, within distribution,” Ms Dickinson told the BBC. That will keep the impact of labour costs higher than it would have been on prices for consumers.
Mike Watkins, head of retailer and business at Insight, NielsenIQ which also compiled the BRC’s report, said the fall in food price inflation was “to be expected”.
He said it was “helped by intense competition amongst the supermarkets as they look to drive footfall, with focussed price cuts and promotional offers earlier in the month for Mother’s Day and now again in the weeks leading up to Easter”.
Source: BBC
In other news – Prime Minister Rishi Sunak defends rollout of free childcare hours
The government has defended its rollout of free childcare after Labour called the system a “total mess”. The scheme is being expanded in phases, with 15 hours of free childcare now available for working parents of two-year-olds.
Rishi Sunak called it a “positive and exciting moment”, while Education Secretary Gillian Keegan said 150,000 families had already registered. But Labour said last week it would not commit to the plans. Read more
