Yahoo Finance Shop prices fall again amid low demand and ‘intense’ online competition
Shop prices fell by 2.4% in March as the third consecutive month of lockdown led many non-food retailers to heavily discount their products.
The latest British Retail Consortium (BRC)-Nielsen shop price index, published on Wednesday, showed that in January, high demand for home deliveries drove a 126.8% surge in online supermarket spend. Purchases by over 65s also grew much faster than other age groups, more than quadrupling (332.5%) compared to last year.
Helen Dickinson, BRC CEO, said “low demand and intense competition online will help thrifty consumers find the bargains they are looking for.”
Dickinson also noted that prices of fashion and footwear have seen double digit declines in 11 of the past 12 months, “highlighting how those worst hit have been working hard to tempt consumer spending.”
The rate of decline in March shop prices was the same as in February.
Non-food prices fell by 4%, compared to a decline of 3.9% in February. This was the fastest rate of decline since May 2020.
Food inflation inched up to 0.3% in March, up from 0.2% in February and fresh food prices fell for the fourth consecutive month, at a steady decline rate of 0.8%, the same rate as in the previous two months.
“While food prices inched up slightly compared to last year, they remain significantly below long-term averages, as grocers fiercely protect their market shares,” said Dickinson.
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“Unfortunately, many retailers may not be able to sustain these low prices in the coming months. Rising global food prices, at their highest since 2014, as well as increased oil prices and shipping costs, and Brexit red tape will likely begin to filter through, pushing up prices at tills," she added.
She said the government must ensure that new checks and documentation requirements this autumn avoid introducing significant friction on the import of goods, “otherwise British consumers will end up paying the price.”
It was reported earlier this month that ministers are preparing plans to loosen the border check rules on food and other imports from the EU due to fears that they could damage trade between Britain and the bloc and lead to food shortages in UK grocery stores.
Three national lockdowns as a result of the coronavirus pandemic have cost retailers an estimated £22bn ($30.5bn) in lost sales, the BRC has previously said. It has urged the government to step in in order to avoid administrations, shop closures and job losses.
Meanwhile, Mike Watkins, head of retailer and business insight at Nielsen, said: "With consumer spend limited by pandemic restrictions, non-food retailers are keeping any supply side driven price increases to a minimum and in some cases are reducing prices, to encourage shoppers to maintain spending in the run up to Easter."
A recent report showed that shoppers had already spent £37m on hot cross buns and £153m on Easter eggs by 21 March – £48m more than at the same stage last year.
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