Shop price inflation slowed in September as competition between retailers and increased promotions helped offset the impact of poor harvests and higher global commodity prices, industry figures show.
Overall shop prices were 1.4% higher than a year earlier, down from annual growth of 1.5% in August, according to the British Retail Consortium (BRC) and NIQ.
Food inflation also eased, falling to 2.5% from 2.8% in August. Fresh food inflation dropped from 3% a month earlier to 2.6%.
Inflation for non-food products fell from 0.9% to 0.8%. However, that remained above the three-month average of 0.6%, with strong discounting on back-to-school essentials including books, stationery, footwear and electrical goods helping to bring prices down.
BRC chief executive Helen Dickinson said shop price inflation had edged down as competition between retailers continued to provide value for shoppers.
“Promotions helped bring down meat and dairy prices, though poor harvests across Europe pushed up fruit prices and high global commodity prices kept chocolate and confectionery prices elevated,” she said.
Dickinson said retailers had absorbed successive additional costs but warned that there was a limit to what businesses could shoulder. She said higher business rates due to take effect in April, alongside rising employment costs, energy bills and packaging taxes, meant the Budget was “a fork in the road”.
She called for the rates rise to be frozen and for shops to be removed from the business rates surtax, saying otherwise more costs could be passed on to consumers.
Mike Watkins, head of retailer and business insight at NIQ, said many retailers had maintained promotions, while some had introduced price cuts to help drive demand. He said these measures were helping to keep inflation lower than a year earlier.
Watkins added that tighter household budgeting was expected in the fourth quarter, meaning retailers would still need to absorb cost increases wherever possible.
The figures show that overall shop price inflation eased in September, although prices remained higher than a year earlier and some categories continued to face upward pressure from harvest conditions and commodity costs.
