Food inflation has seen a slight rise due to poor harvests affecting key products.
- Food inflation was up to 2.3% in September, according to the BRC-NielsenIQ Shop Price Index.
- Fresh food inflation has increased from 1% in August to 1.5% in September.
- Ambient food inflation has slightly decreased, marking its lowest rate since March 2022.
- Overall shop price deflation continues, hitting its lowest since August 2021.
Food inflation witnessed an increase to 2.3% in September, a slight uptick from 2% in the previous month. This rise is primarily driven by poor harvests in critical producing regions, which have resulted in increased prices for sugary products and cooking oils, as reported by the British Retail Consortium (BRC) and NielsenIQ Shop Price Index. Such inflationary pressures reflect a stabilisation of shop price inflation closer to the long-term range, indicating a shift in market dynamics.
An analysis of fresh food prices reveals a significant acceleration, with inflation rising from 1% in August to 1.5% in September. Despite this increase, ambient food inflation has decreased slightly to 3.3% from 3.4%, marking its lowest rate since March 2022. This trend indicates a contrasting movement in different food categories, suggesting varied impacts within the food market.
Overall shop price deflation was recorded at 0.6% in September, down from 0.3% in August, highlighting a continuous decline in pricing trends. Retailers are increasingly leveraging discounts and competitive pricing strategies in response to the deflationary environment, as noted by industry experts such as NielsenIQ’s Mike Watkins. He emphasised the necessity for retailers to drive demand through attractive promotions in the coming weeks.
BRC Chief Executive, Helen Dickinson, observed that September presented opportunities for consumers to benefit from substantial discounts, as fierce market competition drove shop prices further into deflation. However, she warned that factors such as geopolitical tensions, climate change, and regulatory costs could reverse this positive trend, urging potential government intervention to alleviate the retail sector’s disproportionate tax burden.
A proposed ‘20% Retail Rates Corrector’ is being advocated to adjust bills for retail properties, aiming to create a fairer economic landscape. Such initiatives are expected to enable retailers to maintain competitive pricing, open new shops, protect jobs, and unlock further investment opportunities within the sector.
The complex interplay between poor harvests and strategic retail responses continues to shape the food inflation landscape.
