By Daniel Hunter

Data from the British Retail Consortium (BRC) shows that overall shop price inflation increased to 1.5% in March from 1.2% in February.

Meanwhile food inflation increased to 5.4% in March from 4.2% in February, with non-food reported deflation of 0.9% in March from 0.7% in February.

"Weak demand for many goods means retailers continue to battle hard for consumer spending by keeping prices down wherever possible," Stephen Robertson, British Retail Consortium Director General, said.

"Non-food prices fell at their fastest for 28 months. Electrical goods and clothing and footwear experienced the biggest price falls driven by widespread promotions.

"The cost of oil has shot up 11 per cent since the start of the year and that's driven up transport and manufacturing costs, increasing food inflation. Retailers are also shifting away from multi-buy reductions on specific items in favour of money-off coupons for an entire shop, giving customers more flexibility and producing savings on food shopping which don't show up in this index.

"As a result, overall shop price inflation has edged up slightly but remains well below the official consumer prices figure of 3.4 per cent."

Mike Watkins, Senior Manager, Retailer Services, Nielsen said that inflationary pressures are continuing for the spending public.

"Consumers are having to cope with falling disposable incomes with fuel and household energy costs also increasing since the start of the year," he said.

"With inflationary pressure continuing in the food supply chain we can expect supermarkets to keep a strong focus on promotional activity over the next few months. Shoppers are following the deals and will continue to seek out the best value for money."

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