Shop prices slowed down in March, with the inflation rate dropping to 1.2 per cent compared to 1.7 per cent in February.
According to areport from the British Retail Consortium, this month has seen the first reduction in the rate of inflation for non-food products since VAT returned to 17.5 per cent.
According to the BRC, the falling prices have been caused by weak consumer demand and excess production and stock, resulting in retailers bearing the brunt of the combined effects of the devalued Pound, the VAT rise and rising commodity costs.
“Downward pressures on pricing continue to impact all channels caused this month by a slowdown in ambient food prices as well as non-food prices,” commented Mike Watkins, senior manager for retailer services at Nielsen, which helped compile the report.
“Retailers have needed to drive footfall with increased promotional activity pre-Easter and also to compensate for the increase in VAT. Overall the consumer remains cautious about spending.”