UK shop prices fall but hikes are coming, warns BRC

(Sharecast News) - UK shop prices slipped in March as retailers held back from hiking rates, according to data out on Tuesday from the British Retail Consortium (BRC), which warned of rising cost pressures for the industry over the coming months. Prices at UK tills declined by 0.2% last month following a 0.4% increase in February, the monthly BRC-NielsenIQ Shop Price Index showed, with non-food prices falling 0.2% and food prices holding steady.

However, compared with March 2024, overall shop prices fell 0.4%, following a 0.7% year-on-year decline the month before. While annual food inflation accelerated to 2.4% from 2.1%, non-food deflation eased to -1.9% from -2.1%.

Mike Watkins, head of retailer and business insight at NielsenIQ, said increased competition and seasonal promotions were the reason for the overall drop in prices last month, as retailers compete to lure in "reluctant shoppers".

"With upwards pressure on prices, retailers may also need some focussed price cuts to help footfall in the run up to the late Easter," he said.

However, Helen Dickinson, chief executive of the BRC, said retailers were "do[ing] all they can to protect customers from the cost pressures bearing down on the industry".

"With retailers bracing for significant extra costs which kick in later this week as a result of the Budget, inflation will likely accelerate in the coming months. Along with new packaging taxes later this year, retailers will be shouldering an additional £7bn in costs. It is crucial that the Employment Rights Bill and business rates reform don't further inflate costs and increase red tape," she said.