Retailers hold back price rises in March

Shop price inflation increased to -0.4% year-on-year in March, set against a decline of 0.7% in February, according to the latest data from the BRC-NIQ Shop Price Index.

Non-food inflation increased to -1.9% year-on-year last month. That was against a decline of 2.1% in February, with brands and retailers trying to protect customers from rising prices.

Helen Dickinson, CEO of the British Retail Consortium (BRC), said: "Retailers continue to do all they can to protect customers from the cost pressures bearing down on the industry.

"Prices fell for most non-food categories, which kept year-on-year overall shop prices in deflation, but at a reduced rate compared to February.

"With retailers bracing for significant extra costs which kick in later this week as a result of the Budget, inflation will likely accelerate in the coming months. Along with new packaging taxes later this year, retailers will be shouldering an additional £7 billion in costs.

"It is crucial that the Employment Rights Bill and business rates reform don’t further inflate costs and increase red tape."

Mike Watkins, Head of Retailer and Business Insight at NielsenIQ, added: "There is competition on the high street as retailers look to pull in reluctant shoppers with seasonal promotions.

"However, with upwards pressure on prices, retailers may also need some focussed price cuts to help footfall in the run up to the late Easter."

UK businesses are set to face a multibillion-pound wave of higher costs this week as higher wages and tax increases come into force.

Retail and hospitality bosses have warned that higher labour costs and taxes are set to push up prices for customers across the UK.

A raft of measures linked to the Labour Government’s first budget come into force today, including a rise in the national minimum wage and higher property tax payments. That will swiftly be followed by changes to national insurance contribution (NICs) payments from 6 April.

Millions of UK workers will benefit from a rise in the national minimum wage to £12.21 an hour, representing an increase of 77p.

However, the rise in wages come into force at the same time as businesses swallow a raft of tax changes, many of which they had not expected prior to the Autumn Budget.