FOOD price inflation fell to its lowest level in three years last month, according to the latest data published by the British Retail Consortium (BRC) today.
The BRC said that food price inflation was just 1.2 per cent in the year to March – down from 1.3 per cent in the year to February, despite the price of fresh groceries rising.
Overall shop price inflation slowed to 1.2 per cent on a year earlier compared to 1.7 per cent in the year to February. This was the slowest rise in prices since November, the BRC said.
Prices of non-food goods also rose at the slower rate of 1.3 per cent, the first time they have fallen since VAT returned to 17.5 per cent.
Stephen Robertson, director general of the BRC, said: “The competitive battle is even fiercer than usual as retailers fight it out to overcome the reluctance of customers to spend caused by pre-election uncertainty.
“Falling shop price inflation is particularly welcome relief for consumers as they face sharp rises in other living costs, such as fuel,” he added.
The BRC said that it is likely that retailers are absorbing the upward pressure from recent rises in commodity prices into their margins. Data from the BRC also supports the idea that most retailers passed through the VAT rise in full with weak consumer demand and spare capacity bearing down on prices.