Food price inflation dropped to 2.9% in April, driven by falling costs and heavy promotions, new figures have revealed.

Overall shop price inflation dropped to 0.4%, the lowest monthly rate since November 2009, the report from the British Retail Consortium (BRC) and Nielsen showed today. The non-food sector entered deflationary territory, falling to -1%, due in part to cold weather pushing down demand for clothing and outdoor gear.

“Household finances are still under pressure but it’s clear that isn’t coming from the shops”

Helen Dickinson, BRC

“Household finances are still under pressure but it’s clear that isn’t coming from the shops,” said BRC director general Helen Dickinson.

“Food inflation slowed in April, for fresh as well as tinned and packet items, thanks to promotional activity and falls in a number of key costs working through.”

Nielsen’s head of retailer and business insight, Mike Watkins, said: “Retailers will now be looking to keep prices competitive over the next few weeks to keep whatever momentum there is in sales growth going, and for high street retailers this could require summer discounts to start sooner rather than later.”

Fresh and ambient food

Food prices fell 0.4% in April after a 0.6% rise in March, the report added.

Fresh food inflation fell to 3.1% in April, thanks largely to the fruit & veg and meat categories. Inflation rose in the oils, fats, milk, cheese and eggs categories, the BRC said.

Meanwhile, ambient food inflation fell to 2.7%. This drop was largely fuelled by non-alcoholic beverages and sugars, jams and chocolates, which saw a “sharp deceleration” in their inflation rates, according to the report.

In commodities, the BRC warned inflation may increase as a result of poor harvests in the UK. Projections for wheat yields were revised down to their lowest levels for 25 years, with wheat prices up 13% year-on-year (as of 12 April).

The poor wheat crop has already forced some suppliers to abandon pledges to use 100% British wheat.

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