Shop prices fell for the 34th month in a row in February, to the benefit of consumers, as food returned to deflationary territory and competition on the high street remained fierce.
Prices fell by two per cent in the year to February, which was an acceleration on the 1.8 per cent decline reported in January and above the 12-month average deflation of 1.8 per cent, the British Retail Consortium’s (BRC) latest index showed.
Non-food deflation remained at three per cent for the third consecutive month while food prices fell back into negative territory – down 0.4 per cent compared with January’s rise of 0.1 per cent.
This decline was the deepest fall for four months and comes at a time when supermarkets are increasingly slashing prices of everyday goods to compete for market share.
In February, Morrisons announced another round of price cuts on 1,000 everyday products including fruit and vegetables. The move came after Asda pledged to spend a further £500m on price cuts in addition to the £1bn it committed to in 2013.
“Getting a larger share of the wallet of shoppers continues to a challenge for many food and non-food retailers and competition remains intense on the high street,” Mike Watkins, head of retailer and business insight at Nielsen, said.
“Food prices continue to fall as Supermarkets are working hard to stimulate sales with price cuts rather than multi-buy promotions, and this is leading to continued deflation in food. With uncertain market conditions, offers and discounts are likely to continue for the time being,” he added.