Clothing costs less but food prices resume rise

The cost of clothing, footwear and electrical goods at Britain's shops fell for the second month running in April, with the annual rate of inflation easing to its lowest since the beginning of the year, as retailers sought to lure consumers with Easter discounts, according to a new survey published today.

The British Retail Consortium-Nielsen shop price index showed that non-food inflation had slowed to an annual rate of 1.2 per cent in April, down from 1.5 per cent in March. In monthly terms, prices fell by 0.1 per cent in April after easing by 0.2 per cent in March.

But rising food prices meant that, overall, shop price inflation rose to 2.5 per cent in April from 2.4 per cent in March.

In annual terms, food inflation increased to 4.7 per cent, against 4 per cent in March. Although the figure is likely to have been overstated owing to the timing of Easter promotions relative to last year, prices were up 1.2 per cent in monthly terms, reversing the 0.5 per cent fall in March, with the British Retail Consortium's director general Stephen Robertson highlighting the impact of commodity prices.

"The cost of world commodities, including sugar and wheat, rose even more quickly, inevitably working through to some shop prices," he said. "The consolation for customers is that there is a mass of offers to be had and the fact that 40 per cent of the groceries being bought are on promotion shows that customers are taking up those offers in a big way."

In the clothing and footwear category, annual deflation accelerated to minus 2.1 per cent in April, against minus 1.4 per cent in March. That takes the rate of deflation to its highest since November 2010.

Annual deflation in the electrical goods sector also gained ground, falling to 2.4 per cent last month, with the decline being driven by strong deflation in the cost of audio and visual equipment. Despite the falling prices, the survey indicates that retailer's are still struggling to generate sales as consumers rein in spending on big-ticket items.