British shop prices continued to decline in March, albeit at their slowest pace in the last seven months, figures released on Wednesday (6 April) by the British Retail Consortium (BRC) showed. According to BRC data, shop prices fell 1.7% year-on-year in March, slowing down from the previous month's 2% decline and registering their slowest decline since August 2015 as retailers cut prices to attract customers.

Food prices declined 0.4% year-on-year for the second consecutive month, while the decline in non-food prices eased to an annualised 2.6% from a 3% year-on-year drop in the previous month, the report added.

BRC chief executive Helen Dickinson said the overall decline in shop prices was due to the ongoing competition among retailers.

"Despite consumer confidence remaining at zero, a relatively benign economic environment and a fiercely competitive market will see retailers continue to respond to their customers with prices and promotions to maintain market share as the spring season kicks off," she said.

Data released on Tuesday (5 April) by Kantar Worldpanel showed supermarket sales in the UK grew 1.1% year-on-year in the 12 weeks to 27 March, marking the fastest rate of growth so far in 2016, as retailers benefited from customers splashing money on chocolate and other food items in the run-up to Easter.

However, while inflation and interest rates remaining low are providing a boost to consumers, analysts worry the uncertainty surrounding the referendum on Britain's future in the European Union could have negative effects on British shoppers.

Last month, market research firm GfK said its overall consumer sentiment index stood at zero in March, unchanged from the previous month and the joint-lowest reading recorded since December 2014. Meanwhile, British consumers' confidence over the health of the economy in the next 12 months fell 18 points to -12 compared to the corresponding period in 2015.