Food prices may be falling now, but this is not expected to carry on for much longer for several reasons including the impact of Brexit.
Food prices fell by 0.6% in April, down from a rise of 0.3% in March, the latest British Retail Consortium (BRC)-NielsenIQ Shop Price Index revealed. Shop prices fell by 1.3% in April, a slower decline than the 2.4% decrease seen in March,
Helen Dickinson, BRC CEO, said “falling prices are unlikely to last; in the months ahead retailers will have to battle the cost pressures from Brexit red-tape, rising shipping costs due to international supply issues, as well as increasing global food and oil prices.”
“As these costs filter through, retailers may be left with no option but to pass on some of these costs to consumers.”
WATCH: How to prevent getting into debt
She called on the government to help relieve this pressure “by ensuring that the new checks and documentation requirements this autumn avoid adding further friction to the import of goods.”
Dickinson also explained that the decline in food prices was the result of fewer promotions in April 2020, the time to which the current period is being compared. Back then, retailers were trying to deter shoppers from stockpiling.
Meanwhile, non-food retailers offered discounts on their goods, particularly last season’s stock, as they prepared for new products in anticipation of non-essential shops opening on 12 April.
The BTC chief pointed out that some products, such as furniture, saw prices rise “due to the combination of high demand and disruption to global supply chains.”
Looking ahead, Mike Watkins, head of retailer and business insight, NielsenIQ, said that with the economy reopening “we will start to see a rebalancing of consumer spend and it's good news that there is still shop price deflation.”
“Many households uncertain about their personal finances, if external cost pressures start to feed through then shoppers may become more price sensitive over the next few months, as lifestyles are adapted to a new normal.”
WATCH: What is a V-shaped economic recovery?