Shop price inflation in the United Kingdom slowed in April, as retailers introduced widespread discounts to encourage spending. The shift reflects growing caution among consumers facing renewed pressure on household finances.
The latest data suggests a fragile retail environment, where falling demand and external cost pressures are shaping pricing strategies. While discounts have temporarily eased price growth, underlying risks tied to energy and global tensions remain.
Discounting Drives Slowdown in Shop Price Inflation
Shop price inflation rose by 1% year-on-year in April, down from 1.2% in March, according to the British Retail Consortium. This figure also sits below the three-month average of 1.1%, indicating a modest but notable deceleration in price increases.
According to the British Retail Consortium, retailers applied significant discounts across categories such as clothing, furniture, and DIY goods to stimulate demand during the spring season. Helen Dickinson, chief executive of the BRC, said that weakening consumer confidence pushed retailers to compete more aggressively on price.
Non-food prices reflected this trend most clearly. Inflation in that category dropped to -0.1% year-on-year in April, compared with a 0.1% increase in March, and below the recent three-month average of zero. Food prices also showed signs of easing, with inflation falling to 3.1% from 3.4% the previous month. Discounts on seasonal items, including Easter products like chocolate, contributed to this slowdown.
Fresh food inflation, which has been a persistent concern, also declined. It slowed to 3.9% in April from 4.4% in March, according to data compiled with NielsenIQ. These figures point to a broader effort by retailers to manage price perceptions at a time when consumers are becoming more selective in their spending.
Consumer Caution Deepens as Broader Economic Pressures Build
Despite the easing in shop prices, the broader retail landscape remains under strain. According to data from GfK, consumer confidence fell in April to its lowest level since October 2023, reflecting concerns about future costs and economic uncertainty.
The Confederation of British Industry reported a sharp deterioration in retail conditions. A net balance of 68% of retailers said sales volumes declined in the year to April, compared with 52% in March, marking the weakest reading since the survey began in 1983. According to the CBI, sales volumes were below seasonal norms in April and are expected to remain subdued in May.
Online retail and wholesale sectors also experienced declines. Sales volumes online fell at the fastest rate since January 2024, while wholesalers reported continued weakness linked to high operating costs and reduced demand. Martin Sartorius, lead economist at the CBI, said the sector faced “fragile consumer confidence” alongside persistent cost pressures.
External factors are also influencing expectations. Rising energy and food costs, partly linked to the ongoing conflict involving Iran, are expected to feed into prices in the coming months. According to government officials, higher costs for food and fuel could persist for at least eight months after the conflict ends.
Industry analysts suggest the current slowdown in inflation may be temporary. Mike Watkins of NielsenIQ noted that increasing fuel prices are already contributing to inflationary pressure and are likely to affect both food and non-food supply chains. Retailers have also called on the government to address non-commodity energy costs, which account for a significant portion of business energy bills.
Taken together, the data portrays a retail sector attempting to balance short-term demand support with longer-term cost challenges, in an environment where consumer confidence remains uncertain.
