British retailers struggling during the coronavirus pandemic have cut their prices by the most in a month since 2006, according to industry figures revealing the scale of the economic fallout.
The British Retail Consortium (BRC) and Nielsen said shop prices fell by 2.4% in May following a decline of 1.7% in April as people continued to stay away from the high street during lockdown.
Retail sales in the UK plunged in April at the fastest pace on record as tough controls on business and social activity forced people to stay at home, bringing the economy largely to a standstill.
Consumer spending dropped by almost a fifth in April, according to the most recent government figures, as the coronavirus crisis wiped out 15 years of growth in two months. Some sectors experienced stronger sales, including food and alcohol retailers, as well as DIY shops and garden centres.
Clothing and furniture prices fell the most last month as retailers ran promotions to encourage consumer spending and to cushion the blow from recent losses. The price of all items excluding food fell by 4.6%, comparedwith a drop of 3.7% in April.
Food price inflation eased slightly in May to 1.5%, down from a rate of 1.8% a month earlier. The report found upward pressure on food prices over the year to May, amid rising costs for retailers from implementing social distancing measures in their stores.
The latest snapshot from the retail industry suggests general inflation could fall further in the coming months. Driven by a drop in the global oil price, the consumer price index measure of inflation fell to 0.8% in April, its lowest level in four years.
As some non-essential shops begin to reopen this month as the British government loosens the lockdown, many retailers are expected to offer steep discounts to tempt consumers back to the high street. However, a splurge in consumer spending is not expected given the continued risk of infection from Covid-19 and because of the hit to household finances amid rising unemployment across the country.
Helen Dickinson, the chief executive of the BRC, said: “Many retailers will have to fight to survive, especially with the added costs of social distancing measures.
“Government support remains essential, both to rebuild consumer confidence and to support the thousands of firms and millions of jobs that rely on it.”