Consumers win as prices fall

Period Covered: 01 – 07 September 2023

• Shop Price annual inflation decelerated further to 6.2% in September, down from 6.9% in August. This is below the 3-month average rate of 6.8%. Shop price growth is at its lowest since September 2022.
• Non-Food inflation eased to 4.4% in September, down from 4.7% in August. This is below the 3-month average rate of 4.6%. Inflation is its lowest since December 2022.
• Food inflation decelerated to 9.9% in September, down from 11.5% in August. This is below the 3-month average rate of 11.4% and is the fifth consecutive deceleration in the food category. Inflation is its lowest since August 2022.
• Fresh Food inflation slowed further in September, to 9.6%, down from 11.6% in August. This is below the 3-month average rate of 11.5% and inflation in this category remains elevated. Inflation is its lowest since July 2022.
• Ambient Food inflation decelerated to 10.4% in September, down from 11.3% in August. This is below the 3-month average rate of 11.2% and is the lowest since November 2022.

Note: Month-on-month % change refers to changes in the level of prices.

Helen Dickinson, OBE, chief executive of the British Retail Consortium, said: “Food prices dropped on the previous month for the first time in over two years because of fierce competition between retailers. This brought year-on-year food inflation down to single digits and contributed to the fifth consecutive monthly fall in the headline rate, helped by easing cost pressures. 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.

“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.”

Mike Watkins, head of retailer and business insight, NielsenIQ, said: “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.”