UK Shop Price Inflation Slows as Retailers Ramp Up Promotions

Shop price inflation in the UK has slowed down to 1.4% year-over-year, according to industry figures released by the British Retail Consortium (BRC) and NIQ.

This marks a decline from August's growth of 1.5%, with food inflation also slowing to 2.5% from 2.8%. Fresh food prices rose less sharply than expected, increasing by just 2.6% year-over-year, down from 3% in the previous month.

The slowdown in shop price inflation is attributed to intense competition among retailers, which has led them to offer more promotions and discounts to drive demand. This trend has particularly benefited consumers purchasing back-to-school essentials such as books, stationery, footwear, and electricals.

However, not all products have seen a decrease in prices. Poor harvests across Europe pushed up fruit prices, while high global commodity prices continued to keep chocolate and confectionery prices elevated.

The BRC's chief executive, Helen Dickinson, warned that retailers can only absorb so much cost pressure before passing it on to consumers. With higher business rates set to come into effect in April, alongside rising employment costs, energy bills, and packaging taxes, she urged the Chancellor to take action to mitigate these increases.

Mike Watkins, head of retailer and business insight at NIQ, echoed this sentiment, stating that retailers will need to continue absorbing cost increases wherever possible as household budgets tighten in Q4.