Shop Price Inflation Slows in October Amid Widespread Discounting

Strategic Insights -

Shop price inflation in the UK slowed to 1% in October, driven by fierce competition amongst retailers and widespread discounting, according to the latest figures from the British Retail Consortium (BRC) and NielsenIQ. Fresh food prices, however, saw a sharp rise, with beef, poultry, and fruits driving inflation to 4.3% year-on-year. The overall food inflation slowed to 3.7% in October, a decrease from 4.2% in September, mainly due to easing global sugar prices. The British retail industry is urging the government to reconsider tax hikes in the upcoming budget, warning that additional taxes would lead to further price increases and higher inflation.

Key Takeaways:

  • The British Retail Consortium (BRC) and NielsenIQ reported a 1% overall shop price inflation in October, down from a rise of 1.4% in September, driven by widespread discounting among retailers.
  • Fresh food prices saw a sharp rise, with inflation increasing to 4.3% year-on-year in October, driven by beef, poultry, and fruits.
  • Beef prices, which have a significant weighting on overall food inflation, have been a particular problem this year, partly due to climate-related hurdles such as droughts and changes in supply and demand.
  • Rachel Reeves, the chancellor, and the Bank of England are closely watching the impact of soaring food prices on overall inflation, with consumer prices expected to average 3.4% this year.
  • The BRC warned that adding further taxes on retail businesses would keep inflation higher for longer, and that Labour's promised business rates reform must deliver a meaningful cut to retailers' rates bills.
  • Non-food prices fell 0.4% compared with last year, while prices of electricals and health and beauty fell 0.1% and 0.4%, respectively.
  • The International Monetary Fund (IMF) reported that the UK will face the highest rate of inflation among G7 nations this year and next.

Statistics:

  • 1% overall shop price inflation in October, down from a rise of 1.4% in September.
  • 4.3% inflation in fresh food prices year-on-year in October.
  • 3.7% overall food inflation in October, down from 4.2% in September.
  • 0.4% disinflation rate in non-food items in October, compared with a disinflation rate of 0.1% in September.
  • 4.3% inflation in fresh food prices, driven by beef, poultry, and fruits.

Sources:

  • British Retail Consortium (BRC)
  • NielsenIQ
  • International Monetary Fund (IMF)
  • Getty Images