The latest BRC-NIQ Shop Price Index shows food prices have dropped on the previous month for the first time in over two years amid fierce competition between retailers. This brought year-on-year food inflation down to single digits and contributed to the fifth consecutive monthly fall in the headline rate, helped by easing cost pressures.
The food inflation rate was 9.9% in September, its lowest since August 2022 and down from 11.5% the previous month. Fresh food inflation slowed further to 9.6%, down from 11.6%, while ambient food inflation decelerated to 10.4%, down from 11.3%.
The BRC noted that shoppers who bought dairy, margarine, fish and vegetables would have found lower prices compared to last month.
Overall shop price inflation slowed to 6.2% in September, down from 6.9% in August. Non-food inflation eased to 4.4% from 4.7%, helped by price cuts for school uniforms and other back-to-school essentials.
Helen Dickinson, Chief Executive of the BRC, commented: “We expect shop price inflation to continue to fall over the rest of the year; however there are still many risks to this trend – high interest rates, climbing oil prices, global shortages of sugar, as well as the supply chain disruption from the war in Ukraine.”
Mike Watkins, Head of Retailer and Business Insight at NIQ, added: “With further price cuts by supermarkets in recent weeks, food inflation continues to slow, which is good news.
“However, there continues to be pressure on budgets with over half of households still feeling that they are significantly impacted by the continued increases in cost of living (NIQ Mid-Year Consumer Outlook). So, it will be important for retail sales to keep momentum, which means we can expect more price cuts and increased promotional activity across all retail channels.”
Official inflation figures covering the month of September will be released later this month. The last set of ONS data had food and non-alcoholic drink inflation running at 13.6% over the 12 months to August. Analysts suggested it would be a significant feat if that measure had come down to single digits within the space of a month.
NAM Implications:
- Food price inflation is falling, barely.
- i.e. check cash-strapped consumers.
- All it means is that prices are rising more slowly…
- BRC: however there are still many risks to this trend
- high interest rates
- climbing oil prices
- global shortages of sugar
- supply chain disruption
- It ain’t over yet…
