-General Helen Dickinson, BRC Director
Prices in UK shops declined in March at the fastest pace since records began more than eight years ago amid ongoing supermarket price wars. According to the British Retail Consortium, UK shop price deflation intensified last month, with retail prices being 2.1% lower than a year ago, compared with the 1.7% fall in February. The largest negative contributor was a 7.8% plunge in clothing prices, while food prices dropped 0.9%, the steepest decline on record, compared with a 0.4% fall in the preceding month. Inflation slid to zero in February, according to official data, and the Bank of England expects the British economy to slip into deflation in the first half of this year, the outlook that keeps the central bank in a comfort zone with the benchmark interest rate remaining at all-time low of 0.5% in the foreseeable future. However, cheaper consumer goods would increase household spending power and encourage Britons to buy more. Confirming that view, the Society of Motor Manufacturers and Traders reported UK car industry saw a record number of sales this century with nearly half a million cars sold in March, marking the 37th month of growth for the new car market. Record low interest rates and affordable credit packages helped the market to expand at the beginning of this year. UK car manufacturing remains one of the strongest production sectors and has also been a crucial driver of the manufacturing sector recovery. The sector has been primarily supported by strong domestic demand.
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