Inflation falling

Supermarket rivalry helping to cut food prices

supermarket food
Supermarket competition is helping to bring prices down

Food prices are growing at their slowest rate since December 2021, helped by intense competition among supermarkets.

Shop price annual inflation eased to 1.3% in March, sharply down from 2.5% in February and below the three-month average rate of 2.2%.

Slowing food price growth is contributing to the steep falls in consumer price inflation, now down to 3.4% from its peak of 11% in October 2022. Energy prices have been cut this month following the latest price cap.

The figures will give further support to expectations of an interest rate cut in June and will be regarded as good news for the UK government after months of soaring prices.

Helen Dickinson, hief executive of the British Retail Consortium, said retailers continued to compete fiercely to bring prices down for their customers.

“While Easter treats were more expensive than in previous years due to high global cocoa and sugar prices, retailers provided cracking deals on popular chocolates, which led to price falls compared to the previous month.

“Dairy prices also fell on the month as farmgate prices eased, and retailers worked hard to lower prices for many essentials. In non-food, prices of electricals, clothing and footwear fell as retailers increased promotions to entice consumer spending.”

However, she noted that the figures are good news for consumers, while retailers face significant increased cost pressures, including the largest ever rise in the national living wage that could put progress on bringing down inflation at risk.

Mike Watkins, head of retailer and dusiness insight at NielsenIQ, said: “The slowdown in inflation continues and a key driver this month was a further fall in food prices.

“A year ago, food inflation was 15% so this was to be expected. But it is also helped by intense competition amongst the supermarkets as they look to drive footfall, with focused price cuts and promotional offers earlier in the month for Mother’s Day and now again in the weeks leading up to Easter.”

Key data

* Non-Food inflation fell to 0.2% in March, down from 1.3% in the preceding month. This is below the 3-month average rate of 0.9%. Inflation is its lowest since January 2022.

* Food inflation decelerated to 3.7% in March, down from 5.0% in February. This is below the 3-month average rate of 4.8% and is the tenth consecutive deceleration in the food category. Inflation is its lowest since April 2022.

* Fresh Food inflation slowed further in March, to 2.6%, down from 3.4% in February. This is below the 3-month average rate of 3.6%. Inflation is its lowest since November 2021.

* Ambient Food inflation decelerated to 5.2% in March, down from 7.2% in February. This is below the 3-month average rate of 6.6% and is the lowest since June 2022.

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