Relief for the consumer as falling commodity prices ease inflation

The British Retail Consortium said food prices increased 4.3 per cent year-on-year in April, slower than the 5.4 per cent rate in March. Non-food deflation eased to 0.5 per cent from 0.9 per cent a month earlier. As a result the overall shop price inflation rate slid to 1.3 per cent from 1.5 per cent in March.

The BRC’s director general Stephen Robertson said lower inflation will ease pressure on cash-strapped consumers, as falling global commodity prices feed through to the checkout.

“After the official return to recession, these figures give customers some reasons to be cheerful,” he said.

“Fuel, utilities and even stamps are much more expensive than they were but retailers are holding back or actually cutting prices.

“Food inflation dropped to where it was before March’s sudden rise and non-food goods have now been cheaper than a year ago for three months in a row. This time last year rocketing animal feed and ingredients costs were driving food prices up sharply. Now, easing world prices for commodities such as wheat and sugar are working through to the shops.

“Dairy products, margarine and fish are among the foods seeing much lower inflation than last year. Meanwhile, retailers continue to discount hard but often with vouchers for money off your whole bill or your petrol rather than off individual items.”

Britain’s fourth-biggest supermarket, Bradford-based Morrisons, last week said food inflation remains high, but added it refuses to be drawn into heavy voucher discounting.

Mr Robertson added: “Where food prices go next is hard to predict. Competition will remain intense in the face of weak demand from customers but some commodity price rises – soyabean and corn – are in the pipeline.

“Promotions remain essential to generating sales of goods that are not immediate needs.

“Clothing, shoes, electricals and furniture were all cheaper than this time in 2011 but margin-slashing discounting cannot be sustained forever.”

The BRC said clothing and footwear continues to be the category experiencing the steepest price falls, with deflation of 5.4 per cent, versus 6.5 per cent in March.

Deflation in electricals was 3.7 per cent in April, compared with the 4.7 per cent a month earlier.

DIY and gardening saw 3.8 per cent inflation, up from 2.7 per cent in March.