(Alliance News) - Shop prices in the UK declined again in February, numbers showed on Wednesday, with retailers being forced into discounting activity amid increasing competition and falling demand.
According to the British Retail Consortium-Nielsen Shop Price Index, February shop prices fell by 0.6% year-on-year, compared to a 0.3% decrease in January. The February decline was worse than the 12-month average price retreat of 0.1%, and marginally higher than six-month average decrease of 0.5%.
British Retail Consortium Chief Executive Helen Dickinson said: "Consumers will welcome the fall in shop prices, which accelerated from the previous month, with non-food prices falling at their highest rate since May 2018. This decline was driven by weak consumer demand and intense competition, which led many retailers to prolong their January sales."
Non-food sales fell at faster pace in February, slipping 1.9% year-on-year, compared to 1.5% in January, also faring worse than the 12-month average fall of 1.2%, and the six-month decline of 1.6%.
Food inflation was steady at 1.6% in February, data showed, below the 12-month average price increase of 1.7%, but above the six-month average price rise of 1.4%.
Dickinson added: "Non-perishables, such as cereals, have caused overall food prices to rise. This is likely to worsen as global food prices have been growing at a double-digit rate for the past three months.
"There are currently huge cost pressures bearing down on retailers, including business taxes, the Apprenticeship Levy and rising wages. The upcoming Budget presents an excellent opportunity to address the broken business rates system, starting with transitional relief, which has forced retailers to subsidise other industries by nearly GBP500 million since 2017."
The spate of promotional activity could persist if consumer price inflation continues to grow, Nielsen's Head of Retailer & Business Insight Mike Watkins said, who added that retailers could be forced to implement even deeper price cuts.
Watkins explaned: "Whilst there was a slight increase in food prices this month, this is not going to change how we shop or what we buy, as the wider concerns that consumers have about their own finances continue to make them cautious about spending. But if consumer price inflation increases further over the next few months and if sales growths remain weak, then more retailers may need to compensate with extra promotions."
By Eric Cunha; ericcunha@alliancenews.com
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