In September, UK shop prices experienced their quickest decline in over three years, driven by aggressive discounting strategies by retailers.
- Overall shop prices decreased by 0.6% in September, marking the most significant deflation since August 2021.
- Non-food items faced a steep deflation of 2.1%, influenced by discounts on clothing and furniture, responding to low consumer demand.
- Fresh food prices continued to rise, driven by adverse weather affecting local and imported produce.
- Industry experts note the stabilization of shop price inflation while advising retailers to continue their promotional efforts.
In a significant development for the retail sector, shop prices in the United Kingdom fell sharply in September, according to data released by the British Retail Consortium (BRC). The 0.6% decrease in shop prices represents the fastest rate of deflation since August 2021, offering a glimpse of relief to consumers amidst ongoing economic pressures.
Non-food items, in particular, saw a pronounced deflation of 2.1%, up from 1.5% the previous month. This decline was primarily driven by aggressive discounts on clothing and furniture as retailers sought to stimulate demand hindered by unseasonal weather and tightened household budgets. The increased markdowns highlight retailers’ strategies to draw in cautious consumers.
Conversely, fresh food prices recorded a rise, with inflation reaching 1.5% from 1% in August. The uptick is linked to unfavourable weather conditions affecting the production of salads and soft fruits domestically. Additionally, adverse weather in the Atlantic delayed the import of various exotic fruits, further driving up prices. Olive oil, categorised as fresh produce in the BRC survey, also saw significant price surges.
Mike Watkins, head of retail and business insight at NielsenIQ, stated that the decrease in non-food prices would provide much-needed assistance to consumers planning their household budgets. He pointed out, ‘The slight increase in food inflation is indicative of shop price inflation stabilising closer to the long-term range.’ Despite this, he emphasised the necessity for retailers to focus on enticing customers through attractive promotions in the coming weeks.
BRC’s chief executive, Helen Dickinson, commented on the deflation trends, stating that September offered ample opportunities for bargain hunters. She highlighted the role of intense competition in driving down shop prices, particularly in non-food sectors like furniture and clothing. While consumers may welcome easing price inflation, there are underlying risks such as geopolitical tensions and regulatory costs that could potentially reverse this trend.
The UK retail landscape is currently characterised by significant price deflation, particularly in non-food sectors, yet remains vulnerable to external economic influences.
