MNI: UK March Shop Prices Mark 5-Year Deflation Run - BRC

--UK April Shop Prices -1.0% y/y, Unchanged On March

     LONDON (MNI) - UK shop prices fell by a larger extent in April, marking 5

years of deflation as prices were lower for the 60th consecutive month, with the

move lower driven by non-food inflation, data from the British Retail Consortium

showed.

     The BRC Shop Price Index (SPI) was flat on the month in Appril, taking

prices down 1.0% on the year, in line with the 1.0% fall seen in March. The data

overall are consistent with the picture of UK inflation trending lower in the

coming months as the impact of the pound's post-Brexit vote depreciation fade

somewhat.

     The official data showed that since peaking at 3.1% in November, headline

CPI fell to 2.7% in February, and more recently to 2.5% in March.  

     Food price inflation picked up in April according to the SPI. The March

data followed February's 0.4 percentage point y/y increase with a further 1.0pp

y/y gain, -- the lowest level in a year. 

     Non-food items continued to ease in price in April. Year-on-year, non-food

prices declined by 2.2%, accelerating from the 1.9% deflation rate recorded a

month prior.  

     The SPI covers only a slice of the UK consumer price basket, with the

non-food element of the SPI covering some of the same ground as core goods

inflation in the official data. 

     "Recent industry data suggests poor footfall and with unseasonably cool

weather punctuated by a brief hot spell, sales momentum has been hard to

sustain. So whilst promotional activity continued after Easter, retailers are

still keeping prices competitive to tempt shoppers back into store as consumers

not yet feeling better off," said Mike Watkins, Head of Retailer and Business

Insight, Nielsen. 

     Recent pay awards data, including the likes of the Bank of England's

Agents' Summary surveys and the monthly XpertHR surveys, have shown a slight

pickup in wage growth as workers secured New Year pay hikes above the 2.0%

threshold seen in recent years. 

     According to Helen Dickenson, Chief Executive of the British Retail

Consortium, however, household's purchasing power could remain restrained for

some time yet.  

     "As negotiations on Brexit continue to play out against this backdrop the

importance of addressing the issue of frictionless movement of goods across

borders is increasing. Retailers must have clarity on this position if they are

to continue to provide a wide range of goods for consumers at affordable

prices," she said.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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