Overall shop price inflation slowed this month as retailers turned to discounts to attract cautious shoppers. And while food inflation remained high, especially for fresh food, it eased for ambient goods.
The BRC-NIQ Shop Price Monitor shows inflation decreased to 1.0% year-on-year in October – below the 1.4% recorded in September and the three-month average of 1.1%.
Non-food prices fell 0.4% as discounts came early in areas such as electricals and health & beauty ahead of Black Friday month.
Meanwhile, food inflation eased to 3.7%, against growth of 4.2% in September and the three-month average of 4.0%.
Fresh food inflation accelerated to 4.3% in October, against growth of 4.1% in the previous month. However, ambient food inflation decreased to 2.9%, against growth of 4.2%, as easing global sugar prices helped to bring down prices of items such as chocolate and confectionery.
“With the Budget less than a month away, the Chancellor has an opportunity to relieve some of the pressures that are keeping the cost of essentials high,” said Helen Dickinson, Chief Executive of the British Retail Consortium (BRC).
“Labour’s promised business rates reform must deliver a meaningful cut to retailers’ rates bills, and ensure that no store pays more. Rising employer National Insurance Contributions and a new packaging tax have directly contributed towards rising inflation, according to the Bank of England. Adding further taxes on retail businesses would inevitably keep inflation higher for longer.”
Mike Watkins, Head of Retailer and Business Insight at NIQ, added: “Inflation is higher than a year ago, and with pressure on household budgets and weak sentiment, retail spend continues to be subdued. However, food retailers are in a battle for market share, and many are offering targeted price cuts, and non-food retailers will wish to avoid any price increases over the next couple of months.”
NAM Implications:
- The issue with food price Inflation is the effect it has on consumer buying behaviour i.e. the move from mults to the discounters.
- Consumers are moved to change behaviour by their perception re rising prices.
- Similarly with moving from brands to own label equivalent.
- The problem is the cost and effort (advertising/promos) in getting them back to traditional behaviours.
- Especially as they realise that the compromises they were led to expect were not as great as anticipated.
- (We are in the midst of very fundamental changes in the perceived value of Brand Premia…)
