The only way is down as far as grocery prices are concerned, with prices falling by their fastest rate yet last month.
The Grocer Price Index, collated by The Grocer and BrandView from over 60,000 items across the big four, recorded annual deflation of 2.5% in the month to 1 April.
The highest previous level of annual deflation was 2.2%, recorded in the month to 1 March 2015. A year ago, in the month to 1 April 2014, GPI inflation was running at +1.1%.
In this month’s GPI, all grocery categories but one - baby goods, which recorded a small increase in average prices - experienced deflation. The vast majority of those saw significant deflation, of 1% or more.
Soft drinks again saw the biggest annual price falls, with average prices dropping by 3.9% across the big four on a year-on-year basis.
Annual deflation for alcohol was almost twice as steep as in the month to 1 March, with average prices moving from -1.8% to -3.4%.
Significant year-on-year price drops were also seen in meat, fish & poultry (-3.8%) and bakery (-3.1%).
On a month-on-month basis, alcohol prices were down 3% - easily the biggest price fall over the month. However, major categories including dairy (+0.3%), chilled (+0.2%) and bakery (+0.1%) edged up during the month, to take the average month-on-month price falls across all categories to a more modest -0.15%.
Morrisons was responsible for the biggest annual price falls for the first time since the month to 1 December. New CEO David Potts has already shaken up the Morrisons board, but has yet to commit to act on price further than its previously announced £1bn investment.
Nevertheless, the supermarket saw annual price deflation of 3.5% during the month, beating Tesco’s annual price drop of 3%. Sainsbury’s had been the biggest year-on-year price cutter of the big four for the previous three months, but its annual price fall was just 2.5% this month compared with 2.9% the previous month. Asda saw average prices fall by 1.4%, while Waitrose, not in the GPI calculation because of its more limited online pricing data, recorded price falls of 1%.
In terms of specific categories, Morrisons’ performance in health & beauty stands out, where it recorded a huge 8.6% drop in prices, seemingly due to heavier discounting. It also saw big price falls in biscuits, confectionery and snacks (-5.5%); fruit & veg (-4.4%); and soft drinks (-4.4%).
Grocery price deflation is currently being driven by three core factors: the supermarket price war; continued low prices for key commodities; and the general deflationary environment thanks largely to lower oil prices. The Office for National Statistics recorded CPI inflation of zero for the first time in February, partly due to a 16.6% collapse in petrol prices.