Discounting 'still widespread in fashion' as a rise in inflation looms

Shop price inflation was unchanged at -0.7% year-on-year in February compared to January, while non-food inflation decreased to -2.1% against a decline of 1.8% in January, however inflation is looming.

That’s according to the latest data from the BRC-NIQ Shop Price Index, which also reveals that food inflation increased 2.1% year-on-year in February, up from 1.6% in January – above the three-month average of 1.8% - with the knock-on effect likely to hit all retail.

Helen Dickinson, Chief Executive Officer of the British Retail Consortium, said: "While shop prices remained in deflation in February, food prices on the month saw the biggest increase in the last year. In non-food, month on month prices rose as January sales promotions ended, especially in electricals and furniture. But discounting is still widespread in fashion as retailers tried to entice customers against a backdrop of weak demand.

"Inflation will likely rise across the board as the year progresses with geopolitical tensions running high and the imminent £7 billion increase in costs from the Autumn Budget and the new poorly designed packaging levy arriving on the doorsteps of retailers.

"We expect food prices to be over 4% up by the second half of the year. If Government wants to keep inflation at bay, enable retailers to focus on growth, and help households, it must mitigate the swathe of costs facing the industry. It can start by ensuring no shop ends up paying more than they already do under the new business rates proposals, and delaying the new packaging taxes."

Mike Watkins, Head of Retailer and Business Insight, NielsenIQ, added: "With many household bills increasing over the next few weeks, shoppers will be looking carefully at their discretionary spend and this may help keep prices lower at non-food retailers.

"However, the increase in food inflation is likely to encourage even more shoppers to seek out the savings available from supermarket loyalty schemes."