By David Milliken
LONDON, April 28 (Reuters) – Easter promotions on chocolate eggs, home renovation materials and clothing helped lower shop price inflation in April, offering households some respite ahead of an expected further rise in prices caused by the Iran war.
The British Retail Consortium said on Tuesday that its monthly survey of major chains showed that prices in April were an average 1.0% than a year earlier, down from a 1.2% increase in March. Food price inflation slowed to 3.1% from 3.4%.
“With weakening consumer confidence, retailers competed harder on price to stimulate more spring spending,” BRC Chief Executive Helen Dickinson said.
Separate figures from the Confederation of British Industry on Monday showed that retailers this month reported the biggest fall in sales volumes in more than 40 years.
The BRC’s inflation measure covers a narrower range of goods than Britain’s official consumer price inflation, which rose to 3.3% in March. Earlier this month the International Monetary Fund forecast British inflation would reach 4% this year.
“While we’re yet to see the full force of the Middle East conflict feeding into consumer prices, it will not be long before it begins to,” Dickinson said.
The Bank of England’s Monetary Policy Committee is meeting this week to set interest rates and is keeping a close eye on the extent to which businesses are passing on increased costs, although most economists expect it to leave rates on hold for now.
“Retailers will look to hold back any price increases as long as possible as alongside fragile consumer confidence, accelerating inflation is likely to negatively affect consumer spending,” said Mike Watkins, head of retailer and business insight at NIQ, which provides data for the BRC survey.
BoE Governor Andrew Bailey told Reuters in an interview this month that businesses he had spoken to had reported a lack of pricing power – offering some reassurance that inflation would not surge to the same extent as in 2022, when it topped 11%.
(Reporting by David Milliken; editing by Suban Abdulla)
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