UK shop prices fell again last month, according to data from the retail sector, with most of the deflation coming from non-food items.
Shop price inflation was down 0.4% in March, up from deflation of 0.7% in February, data from the British Retail Consortium showed on Tuesday.
Rival data on the supermarket industry from Kantar found that levels of price-cut promotions had reached the highest early spring level in four years, though grocery price deflation was 3.5% for the four-week period ending 23 March.
Prices in supermarkets are rising fastest in markets such as chocolate confectionery, butters & spreads and chilled smoothies & juices and are falling fastest in dog food, household paper products and cat food, Kantar found.
Non-food inflation was down 1.9%, compared with 2.1% in February, the BRC said, while food inflation rose to 2.4%, from 2.1% the previous month, with fresh food inflation easing to 1.4% but ambient food inflation rising to 3.7%.
Price drops in most non-food categories helped keep overall prices in deflation, said Helen Dickinson, chief executive of the BRC.
“Clothing and footwear was in double digit deflation as a result of weak consumer demand,” she said.
She warned that inflation may rise in the coming months. “Retailers will be shouldering an additional £7 billion in costs,” Dickinson said, referring to measures on minimum wages and National Insurance contributions announced in the autumn Budget and packaging taxes later this year.
Mike Watkins, head of retailer and business insight at NielsenIQ, which carries out the survey, suggested that retailers may need "focused price cuts" to boost footfall ahead of Easter.
“There is competition on the high street as retailers look to pull in reluctant shoppers with seasonal promotions,” he said.
Kantar, meanwhile, found that promotional activity climbed to 28.2% of grocery spending in March, the highest level for this time of year since 2020.
Price cuts, not multibuys, drove the surge – accounting for £2.6 billion in promo spend, but this is still a long way from 2012’s record deal levels, when almost 40% of spend was on offer.
Tesco PLC (LSE:TSCO) notched up a £500 million year-on-year sales boost, lifting its market share to 27.9%, from 27.3% a year ago, while J Sainsbury PLC (LSE:SBRY) clocked 35 straight periods of growth, while Morrisons and Asda lagged behind, with the latter's share slipping to 12.5%.
Aldi and Lidl continued to outpace the pack, with sales up 5.6% and 9.1%, respectively as Lidl drew in 385,000 more shoppers than last year.
** Update: Adds Kantar data **