Latest data from the BRC-NielsenIQ Shop Price Index shows food inflation has decreased for the sixth month in a row and is now at a level not seen in more than a year.
The October year-on-year rate of food price rises stood at 8.8%, down from 9.9% in September. This means food inflation is now at its lowest since July 2022.
With prices for some domestically produced foods, such as fruit, lower compared to the previous month, fresh food inflation slowed further in October to 8.3%, down from 9.6%. Ambient Food inflation decelerated to 9.5%, down from 10.4%.
This compares to the latest official Office of National Statistics (ONS) data, which showed food and non-alcoholic drink inflation was 12.2% in the year to September.
Mike Watkins, head of retailer and business insight at NielsenIQ, noted that while inflation has helped the topline sales growth of many food retailers this year, shoppers have been paying more and buying less.
Meanwhile, the BRC’s overall rate of shop price rises decelerated further to 5.2% in October, the lowest level since August 2022 and down from 6.2% the previous month. Non-food inflation fell to 3.4%, down from 4.4%.
The BRC noted that the declines came despite a weaker pound and emerging trade frictions leading to higher price growth for imported goods.
Retailers will be hoping that softer price rises will tempt consumers to spend over the all-important Christmas trading period. “As inflation continues to decelerate, we now need an uptick in sentiment to help retail sales over the next eight weeks,” said Watkins.
Meanwhile, Helen Dickinson, Chief Executive of BRC, called on the Chancellor to take action to ease inflation pressures.
“Retailers have been battling to keep prices down for their customers in the face of rising transport costs, high interest rates and other input costs,” she said.
“To keep inflation heading in the right direction, it is vital that the Government does not burden businesses with unnecessary new costs. Without immediate action from the Chancellor, retailers have an additional £470m per year on their business rates bill, jeopardising the progress made. Ultimately, it’s consumers who would pay the price for the rising rates bill.”
NAM Implications:
- ‘Continues to ease’ simply means that input prices are not rising as fast.
- Meaning little direct effect on shelf prices.
- And the cash-strapped shopper is still in trouble…
- (And Christmas is coming…)
