Fierce competition keeps prices down

Period Covered: 01 – 07 October 2020

Shop Prices fell by 1.2% in October compared to a 1.6% decline in September. This decline is below the 12-month average price decrease of 1.1%, but above the 6-month average price decrease of 1.6%, respectively.

• Non-Food prices fell by 2.7% in October compared to a decline of 3.2% in September. This is in line the 12-month average price decline of 2.7%, but above the 6-month average price decline of 3.4%.
• Food inflation was steady at 1.2% in October. This is below the 12- and 6-month average price increases of 1.4% and 1.3%, respectively.
• Fresh Food inflation accelerated to 0.4% in October, up from 0.2% in September. This is below the 12-month average price increase of 0.6%, but in line with the 6-month average price increase of 0.4%.
• Ambient Food inflation slowed to 2.3% in October, down from 2.5% in September. This is below the 12- and 6-month average price increases of 2.6% and 2.6%, respectively.

Helen Dickinson OBE, chief executive, British Retail Consortium: “Once again, it is good news for consumers with shop prices falling in October, albeit at a slower pace compared to the previous month. As the retail industry began to see sales bounce back, non-food prices saw the shallowest decline since the start of the pandemic. However, given the wider economic context, with stricter restrictions and a possible rise in unemployment, we are likely to see continuing discounts in non-food for months to come. Meanwhile, food inflation remained low as supermarkets fiercely competed with one another to offer the best quality goods at the lowest prices.

“There is bad news on the horizon for consumers as time continues to run out to agree a free trade deal with the EU. Unless such an agreement can be signed in sealed in the next few weeks, retailers will be unable to provide the same value to their customers after 1st January. The government must do all in their power to secure a zero-tariff deal or else it will be the public who suffer the consequences of higher prices.”

Mike Watkins, head of retailer and business insight, Nielsen: “With pandemic restrictions extended, shopping behaviour has been in a holding pattern as households adjust to new ways of working, living and spending. To help sales volumes, non food retailers are limiting any price increases coming through the supply chain and food retailers are continuing with the lower prices introduced in recent weeks. And should the recession and the growth in unemployment have a further impact on consumer spend, we can expect shop price inflation to remain low for the rest of the year.”