UK shop inflation has eased to its lowest rate in more than a year helped by falling prices of homegrown food, according to data that suggests the hit to households from historically high grocery costs is continuing to abate.
The British Retail Consortium said on Tuesday (31) that annual shop price inflation dropped to 5.2 per cent in October from 6.2 per cent in September, the fifth consecutive monthly decline and the lowest rate since August 2022.
Helen Dickinson, chief executive of the trade body, said that while a weaker pound and emerging trade frictions had led to higher price growth for imported goods, “prices for some domestically produced foods, such as fruit, were lower compared to last month”.
With wage growth still strong, falling shop price inflation could boost households’ income and spending in time for Christmas, the busiest period of the year for retailers. Food prices increased at the fastest pace in more than 45 years in spring 2023, reflecting the surge in wholesale prices after Russia invaded Ukraine in February 2022.
The surge in food costs hit poorer households the hardest because they spend a bigger share of their income on essentials. High grocery prices have led consumers to cut food purchases, which remain 3.7 per cent below their pre-pandemic level, according to separate data from the Office for National Statistics.
Mike Watkins, head of retailer and business insight at research group NielsenIQ, which helped compile the data, said, “Inflation has helped the topline sales growth of many food retailers this year but in reality, shoppers have been paying more and buying less.”
The BRC reported that food inflation decelerated from 9.9 per cent in September to 8.8 per cent in October, the sixth consecutive monthly drop, taking food price growth to its lowest since July 2022. The drop was driven by a slowdown in fresh food inflation to 8.3 per cent in October, down from 9.6 per cent in the previous month and well below its peak of 17.8 per cent in April.
Price growth of so-called ambient food — items that can be stored at room temperature — decelerated more slowly to 9.5 per cent in October from 10.4 per cent in September. Non-food prices have risen at a lower rate, peaking at 5.9 per cent in March and declining to 3.4 per cent in October, the lowest since September 2022.
Retailers will look closely at Tuesday’s data in the run-up to Christmas for signs that softer price rises will boost consumer morale.
“As inflation continues to decelerate, we now need an uptick in sentiment to help retail sales over the next eight weeks,” said Watkins.
Ian Howell
www.asiantrader.biz
