Retail prices in the UK continued to slip, according to the latest BRC-Nielsen Shop Price Index, hurt by intense competition among retailers.
According to the new report, shop prices fell by 1.2% in October, following a 3.2% drop in September. The decline was led by a 2.7% drop in non-food price.
Fresh food inflation increased to 0.4% in October (from 0.2%), while ambient food prices increased by 2.3%, resulting in overall food inflation of 1.2%.
Helen Dickinson, chief executive of the British Retail Consortium, said: “Once again, it is good news for consumers with shop prices falling in October, albeit at a slower pace compared to the previous month. As the retail industry began to see sales bounce back, non-food prices saw the shallowest decline since the start of the pandemic.
“However, given the wider economic context, with stricter restrictions and a possible rise in unemployment, we are likely to see continuing discounts in non-food for months to come. Meanwhile, food inflation remained low as supermarkets fiercely competed with one another to offer the best quality goods at the lowest prices.”
Mike Watkins, head of retailer and business insight at Nielsen, added: “With pandemic restrictions extended, shopping behaviour has been in a holding pattern as households adjust to new ways of working, living and spending.
“To help sales volumes, non food retailers are limiting any price increases coming through the supply chain and food retailers are continuing with the lower prices introduced in recent weeks.
“And should the recession and the growth in unemployment have a further impact on consumer spend, we can expect shop price inflation to remain low for the rest of the year.”
NAM Implications:
- Desperate times out there, folks.
- (deepest, longest recession, price war, fighting for share, all-or-nothing for many)
- Price rises (despite cost increases) not an option..
- Key will be when these pressures impact supplier-retailer relationships…
