Latest NielsenIQ data published by the British Retail Consortium (BRC) shows that shop prices fell for the second consecutive month in September as retailers battled to attract shoppers during a period of weak consumer confidence.
Overall, prices fell by an annual rate of 0.6% last month, down from a 0.3% contraction in the previous four-week period and the lowest rate since August 2021.
Non-food deflation increased to 2.1% in September after a 1.5% decline in prices in the preceding month. Furniture and clothing saw the biggest drops as retailers introduced more discounts to entice back shoppers after a disappointing period of trading over the summer months.
However, food price rises accelerated, with inflation of 2.3% in September, up from 2.0% in August. This was blamed on poor harvests in key producing regions, which led to higher prices for cooking oils and sugary products. Fresh food inflation rose to 1.5%, up from 1.0%, while ambient food inflation decelerated to 3.3%, down from 3.4%.
Helen Dickinson, Chief Executive of the BRC, commented: “Easing price inflation will certainly be welcomed by consumers, but ongoing geopolitical tensions, climate change, and government-imposed regulatory costs could all reverse this trend.”
Mike Watkins, Head of Retailer and Business Insight, NielsenIQ, added: “With non-food prices in deflation, this will help shoppers as they plan their household budgets for the rest of the year, and the slight increase in food inflation is indicative of shop price inflation stabilising closer to the long-term range. Even so, retailers will still need to focus on driving demand with attractive promotions over the next few weeks.”
Official inflation figures are due to be published on 16th October.
NAM Implications:
- Given that in business, it can be more productive to focus on effect than outside causes…
- …then the resulting price increases make it easier to appreciate:
- The swing away from big-ticket purchases
- The move to less expensive own-label
- And the resulting difficulty in getting them back to branded equivalents as they vote with their feet because of the perceived size/value of the brand-premium
- …with real price cuts, the only real option.
- Reality rules eventually…
