Food prices finally falling

Food prices in the UK are finally falling, shows new data today (3), primarily due to a supermarket price war and easing inflationary pressures.

The British Retail Consortium reports that UK food prices decelerated to 9.9 per cent in September, down from 11.5 per cent in August, marking fifth consecutive deceleration in the food category. Fresh Food inflation slowed further in September, to 9.6 per cent, down from 11.6 per cent in August.

Ambient Food inflation decelerated to 10.4 per cent in September, down from 11.3 per cent in August.

Helen Dickinson, OBE, chief executive of the British Retail Consortium, said “fierce competition between retailers” pulled year-on-year food inflation down to single digits.

“Customers who bought dairy, margarine, fish and vegetables – all typically own-brand lines – will have found lower prices compared to last month. Households also benefitted from price cuts for school uniforms and other back-to-school essentials,” she said.

“We expect Shop Price Inflation to continue to fall over the rest of the year, however there are still many risks to this trend – high interest rates, climbing oil prices, global shortages of sugar, as well as the supply chain disruption from the war in Ukraine. Retailers will continue to do all they can to support their customers and bring prices down, especially as households face being squeezed by higher energy and mortgage bills,” she said.

Overall, the BRC says prices in British store chains rose at the slowest pace in a year in September, with annual shop price inflation cooling to 6.2 per cent last month from 6.9 per cent in August, its lowest since September 2022.

Annual non-food inflation dropped to 4.4 per cent in September, its lowest since December 2022, and down from August’s 4.7 per cent.

Food prices have been a key factor pushing up the official UK inflation rate in the last 18 months or so, so the BRC’s figures could indicate the cost of living squeeze is easing.

Commenting on the BRC figures, Mike Watkins, Head of Retailer and Business Insight, NielsenIQ, stated that with further price cuts by supermarkets in recent weeks, food inflation continues to slow which is good news.

“However there continues to be pressure on budgets with over half of households still feeling that they are significantly impacted by the continued increases in cost of living. (NIQ Mid-Year Consumer Outlook). So, it will be important for retail sales to keep momentum which means we can expect more price cuts and increased promotional activity across all retail channels.”