Shop prices move further into deflation

Period Covered: 01 – 07 September 2024

• Shop Price deflation was at 0.6% in September, down from deflation of 0.3% in the previous month. This is below the 3-month average rate of -0.3%. Shop price annual growth was at its lowest rate since August 2021.
• Non-Food remained in deflation at -2.1% in September, further down from -1.5% in the preceding month. This is below the 3-month average rate of -1.5%. Inflation is at its lowest rate since March 2021.
• Food inflation picked up to 2.3% in September, up from 2.0% in August. This is above the 3-month average rate of 2.2%. The annual rate continues to ease in this category and inflation remained at its lowest rate since November 2021.
• Fresh Food inflation accelerated in September, to 1.5%, up from 1.0% in August. This is above the 3-month average rate of 1.3%. Inflation returned to its June 2024 rate.
• Ambient Food inflation decelerated to 3.3% in September, down from 3.4% in August. This is below the 3-month average rate of 3.4% and remained at its lowest since March 2022.

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

Helen Dickinson OBE, chief executive of the BRC, said: “September was a good month for bargain hunters as big discounts and fierce competition pushed shop prices further into deflation. Shop price inflation is now at its lowest level in over three years, with monthly prices dropping in seven of the last nine months. This was driven by non-food, with furniture and clothing showing the biggest drops in inflation as retailers tried to entice shoppers back. Food inflation edged up slightly as poor harvests in key producing regions led to higher prices for cooking oils and sugary products.

“Easing price inflation will certainly be welcomed by consumers, but ongoing geopolitical tensions, climate change, and government-imposed regulatory costs could all reverse this trend. Retail faces a disproportionate tax burden compared to other industries and government must take decisive action in the upcoming Budget and introduce a 20% Retail Rates Corrector – a 20% adjustment to bills for all retail properties – to level the playing field. This will allow retailers to continue to offer the best possible prices to their customers while opening shops, protecting jobs and unlocking investment.”

Mike Watkins, head of retailer and business insight, NielsenIQ, said: With non-food prices in deflation, this will help shoppers as they plan their household budgets for the rest of the year, and the slight increase in food inflation is indicative of shop price inflation stabilising closer to the long-term range. Even so, retailers will still need to focus on driving demand with attractive promotions over the next few weeks.”