More price hikes on the way

Cash-strapped consumers benefited from the biggest fall in food prices for nearly two years last month, but retailers warned the relief will be short-lived, with more price hikes on the way.

Food prices fell 0.5 per cent between February and March, in their biggest monthly decline since August 2009, as retailers sold an unprecedented 40 per cent of items on special offer, the British Retail Consortium (BRC) said today.

A 0.2 per cent fall in the price of non-food items, with health and beauty products showing the biggest reductions, meant that overall shop prices were 0.3 per cent lower month on month after their first drop since June 2010.

Retailers, who have suffered from weak demand in 2011, discounted their prices despite the continuing rise in oil and other commodity costs, but will inevitably push them back up again in coming months, the BRC warned. Increased costs will work their way through the supply chain, it added.