London, UK – Recent industry figures indicate that falling chocolate, sugar, and jam prices have contributed to a notable decrease in food price inflation, reaching its lowest level in over two years. According to the British Retail Consortium (BRC), the competition among retailers played a significant role in driving down prices on certain goods in March, although Easter treats experienced a rise in cost.
In a report released by the BRC, the overall rate of price increase dropped by almost half to 1.3% from 2.5% in February, marking the tenth consecutive month of decline in food price inflation. However, despite the decrease, food prices remain 3.7% higher than they were a year ago, down from 5% in the previous month.
Retailers were noted to have engaged in intense competition, particularly in the lead-up to Easter, offering competitive deals and promotions on various products. Prices for dairy items and chocolate saw a decrease in March, alongside reductions in the price of electrical goods, clothing, and footwear due to promotional activities.
Helen Dickinson, the chief executive of the BRC, emphasized that while Easter treats were pricier compared to previous years due to high global prices of cocoa and sugar, retailers managed to provide attractive deals on popular chocolates, resulting in price drops compared to the previous month. Inflation on non-food retail goods also saw a decline in March, falling to 0.2% from 1.3% the month prior.
Despite an overall positive trend in prices, Dickinson warned that costs associated with wages, energy, and other commodities, as well as regulatory changes and post-Brexit border checks, could potentially threaten the downward trend in inflation rates as the year progresses. The recent increase in the National Living Wage is expected to benefit approximately 2.7 million low-paid workers, further impacting consumer prices and the retail industry as a whole.
Following the wage increase, several supermarkets adjusted their pay rates for staff, with competition remaining fierce to attract employees both in stores and other operational areas. Dickinson highlighted the tight labor market, with over 100,000 vacancies in the retail industry, underscoring the ongoing pressure on labor costs and its impact on consumer prices. Mike Watkins of NielsenIQ, which compiled the BRC’s report, acknowledged the expected decrease in food price inflation, attributing it to intense competition among supermarkets focused on driving footfall through strategic pricing cuts and promotional offers leading up to key holidays such as Mother’s Day and Easter.