Shop prices fell at their fastest pace in more than three years in October, boosting the chances of a cut in interest rates by the Bank of England next week.
The data from BRC and NielsenIQ shows overall shop prices fell 0.8% this month, compared to deflation of 0.6% in September.
Food inflation slowed from 2.3% to 1.9%, driven by fresh food that decelerated from 1.5% to 1.0% – its lowest since October 2021. Ambient food inflation fell to 3.1% from 3.3% in September. The BRC noted that prices eased in categories such as meat, fish and tea, as well as chocolate and sweets as retailers introduced deals around Halloween.
Meanwhile, deflation in non-food remained unchanged from the preceding month at 2.1%. Prices fell for electricals such as mobile phones and DIY as retailers capitalised on the recent pick-up in the housing market. However, clothing prices edged up for the first time since January as retailers started to unwind the heavy discounting seen over the past year.
“Households will welcome the continued easing of price inflation, but this downward trajectory is vulnerable to ongoing geopolitical tensions, the impact of climate change on food supplies, and costs from planned and trailed Government regulation,” said Helen Dickinson, Chief Executive of the BRC.
“Retail is already paying more than its fair share of taxes compared to other industries. The Chancellor using tomorrow’s Budget to introduce a Retail Rates Corrector, a 20% downwards adjustment, to the business rates bills of all retail properties will allow retailers to continue to offer the best possible prices to customers while also opening shops, protecting jobs and unlocking investment.”
Mike Watkins, Head of Retailer and Business Insight at NielsenIQ, added: “Inflation in the food supply chain continues to ease and this helped slow the upward pressure of shop price inflation in October. However, other cost pressures remain. Consumers remain uncertain about when and where to spend, and with Christmas promotions now kicking in, competition for discretionary spend will intensify in both food and non-food retailing.”
NAM Implications:
- In uncertain times, retailers are buying custom via promotions.
- And will need to continue, in order to secure an adequate Christmas.
- Unlikely that tomorrow’s Budget will do much to ease uncertainties…
