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Shop prices remain low in Lockdown 3

Tom Bottomley
03 March 2021

Non-food prices fell 3.9% in February compared to a decline of 3.6% in January, 2021, signalling the fastest rate of decline since May 2020, according to the BRC-Nielsen Shop Price Index.

It was below the 12 and six-month average price declines of 3.3% and 3.4% respectively.

Food inflation was steady at 0.2% in February. This is the lowest inflation rate for the category since January 2017.

Helen Dickinson Chief Executive of the British Retail Consortium (BRC), said: “Prices in February fell, driven by a drop in non-food prices. With the third lockdown constricting consumer spending across all income brackets, many retailers have been vigorously discounting products in an attempt to encourage additional spending. Meanwhile, despite Brexit-related costs, food inflation remained steady thanks to fierce competition between grocers to maintain their market share amid declining incomes for some UK households.

“However, consumers could face higher prices in the future as a result of rising global food prices, shipping costs and Brexit red tape. Many retailers are already under great financial strain due to ongoing forced closures and restrictions, and some will not be in a position to continue to absorb all of these added costs.

“It is vital the government uses the Budget today to ease cost pressures on retailers by extending targeted business rates relief for the worst-hit businesses, extending the moratorium on aggressive debt enforcement and lifting the EU state aid limits on lockdown grants. Otherwise, retailers will struggle to continue to provide the competitive prices their customers are used to.”

Mike Watkins, Head of Retailer and Business Insight at Nielsen, added: "With the national lockdown continuing, prices across fashion and clothing retailers continue to fall ahead of the anticipated reopening of stores in April. However, for grocery retailers despite basket spends growing by over 25% and volume sales up 4% since the start of the year, more shoppers are looking to stretch their budget and price led competition is keeping a lid on increases in food prices.”

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