Low consumer demand and stiff competition has continued to push down prices in non-food, with grocery inflation also weakening.
Latest data from the BRC and Nielsen shows September shop prices fell by 0.6% compared to a 0.4% decrease in August. This is the highest rate of decline since May 2018.
With shoppers reluctant to spend due to Brexit uncertainty, non-food prices fell by 1.7% last month compared to August’s decrease of 1.5%.
Meanwhile, food inflation eased to 1.1% from 1.6% the previous month, reflecting both lower domestic prices for vegetables and lower global prices for meat. It is now at a 17-month low after the fresh food inflation rate halved in September to 0.7% and ambient food inflation slowed to 1.7% from 1.8%.
Helen Dickinson, Chief Executive of the British Retail Consortium, commented: “While consumers may welcome lower prices, falling consumer demand is squeezing retailers’ already tight margins. With business costs continuing to rise – including business rates, wage bills, and pension costs – the high street risks more big name closures.
“Reform of business rates remains the most effective way Government can support the retail industry – and they should grasp the opportunity with both hands.”
Mike Watkins, Head of Retailer and Business Insight at Nielsen, added: “With consumers feeling uncertain about spending, retailers continue to focus on limiting price increases coming through the supply chain. Prices have fallen in non-foods, helped by seasonal reductions and many food retailers have introduced price cuts to help regain momentum after a challenging summer.
“Competition for discretionary spend will intensify across all channels as we head towards the end of the year and we anticipate more promotional savings for shoppers and inspiring media campaigns that help to drive incremental sales.”
