Shop prices plunging, consumer confidence rising
Shop prices plummeted 2.1% in March – the deepest deflation rate since records began in December 2006, indicates BRC-Nielsen Shop Price Index. While non-food prices dropped by 2.8% sharper than 2.5% in February, food prices plunged 0.9% compared with 0.4% in February.
“Food prices dipped, largely as a result of promotions for fresh food, while non-food prices fell briskly, hitting a 24th consecutive month of deflation,” elaborates BRC director-general Helen Dickinson. “Clothing and electricals continue to outshine by offering consumers eye-catching bargains. In fact, there’s evidence of plenty of promotions and price-cuts in non-food items, which should help drive up sales at a time when retailers are turning their attention to the summer ranges.”
“Deflation is likely to be with us for the near future, which means shoppers are going to be able to stretch their budgets further when shopping,” observes Mike Watkins, Nielsen head of retailer and business insights. “The implication for food retailers is that this may help sustain the slowly improving sales volumes we have seen in recent weeks, and also encourage consumers to spend some of their savings on affordable indulgences.”
On the other hand, according to GFK, consumer confidence has reached its highest level for 13 years. This could be due to be a result of the consumer price index falling to zero for the first time on record.