Shop prices fall at fastest rate on record

SHOP prices fell at the fastest pace on record in the year to February, with weak increases in food prices failing to stem the sharper decline in the cost of non-food items, according to an index of retailers released today.

The British Retail Consortium (BRC) and Nielsen say shop prices have dropped 1.4 per cent in the last 12 months, the largest annual fall since the survey began over seven years ago. The plunge was driven by non-food prices, which fell by three per cent in the same period.

Though food prices are still rising, the 1.1 per cent increase from February 2013 is the slowest on record. The BRC says February was the 10th month of price deflation.

“This is reflective of a challenging trading environment due to weather and weak demand, but also more favourable global supply conditions during the second part of 2013. Looking ahead, we still anticipate shop prices to remain below CPI for the immediate future,” said Mike Watkins of Nielsen.

Clothing and footwear prices, which are down 12 per cent on the year, drove much of the decline for non-food items, while the fall in several key agricultural commodity costs has kept food prices muted.