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Retail

UK Shop Price Deflation Reaches Record Low In September

UK shop prices reached the shallowest deflation level in the last four years during September, with prices falling just 0.1%, according to the British Retail Consortium (BRC).

In particular, food prices increased to 2.2% in September, up from 1.3% in August, while non-food price deflation accelerated to 1.5% in September, from 1.3% in August.

“Overall shop price deflation reached an all-time low in September with prices now teetering on the edge of inflation," said Helen Dickinson, chief executive of BRC.

“A number of factors have combined to drive a sharp jump in food price inflation to 2.2% over the year to September. A global milk shortage has pushed up butter prices, while rising global cereal prices earlier in the year are now feeding onto shop shelves."

Consumer Uncertainty

Mike Watkins, head of retailer and business insight at Nielsen, warned that the uncertainty around consumer spending has meant that non-food retailers are keeping price increases to a minimum to help maintain sales growth, however, the situation differs at the supermarket.

"Whilst shoppers are seeing increases on their supermarket till receipt as the upward pressure on cost prices filter through, some of the shop price inflation is due to the end of seasonal price cuts in fresh foods," he added.

"The good news is that inflation is expected to peak over the next few months and with consumers still uncertain about when and where to spend, we expect competition for discretionary spend to intensify as we head towards the end of the year with more promotional savings for shoppers across all channels."

© 2017 European Supermarket Magazine – your source for the latest retail news. Article by Francesca Volpe. Click subscribe to sign up to ESM: The European Supermarket Magazine.

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