Food inflation in the UK has fallen to 12.1%, with prices dropping 0.2% between August and September, a situation that will be "particularly welcome" for shoppers as they head into the winter months, the British Retail Consortium has said.
Commenting on the CPI inflation figures, which show headline inflation remaining at 6.7%, Helen Dickinson, CEO of the British Retail Consortium (BRC) said that the drop in food prices reflected the "fierce competition between retailers, their investment in cutting costs, and the fall in the price of some global commodities".
The biggest price cuts during the month were seen on items such as cheese, margarine, pasta and chocolate.
The CPI on food and non-alcoholic beverages stood at 13.6% in August 2023 and 12.1% in September 2023, in terms of year-on -year changes. The CPI on alcoholic beverages and tobacco, however, rose from 10.5% in August to 11.2% in September.
“With the all-important Christmas period fast approaching, retailers hope that cost pressures continue to ease in the coming months," Dickinson added.
'A Mixed Bag'
Elsewhere, Kevin Bright, global leader of the Consumer Pricing practice at McKinsey & Company, said that the CPI figures were a "mixed bag", with higher fuel prices offsetting the benefit of lower food prices.
“This slight easing of grocery inflation is welcome, but it’s still taking a heavy toll on household budgets," he said. "Slowing price increases in most food categories, alongside fierce supermarket competition will have had an impact on shoppers’ food baskets. But with sugar up nearly 60%, and a potential sugar shortage in the coming months – we could see confectionary prices impacted.
“At 6.7%, while significantly down from the 40-year highs seen last autumn, the UK’s inflation rate remains well above our Eurozone neighbours. Manufacturers and retailers need to proactively handle the challenges of maintaining margins in the face of still high inflation rates."
'A Messy Picture'
Finally, Nicholas Hyett, investment analyst at Wealth Club, said the September figures present a "messy picture", with lots of "moving parts" under the surface.
"Food prices have fallen while more domestically exposed sectors like restaurants and hotels have seen prices rise," he said. "Higher prices for motor fuel are also having an effect.
"That makes it a difficult set of numbers to interpret – especially for interest rate setters at the Bank of England. Had inflation continued to fall, as many had expected, then there would be a strong case for rates to stay where they are – slowly squeezing inflation out of the economy. However, if inflation remains stuck at its current stubbornly high level, that’s a whole different kettle of fish."