Shop price inflation eases following retail price wars
UK shop price inflation eased in October to its weakest level this year as food price growth slowed and competition between retailers held down prices, according to the British Retail Consortium.
The BRC-Nielsen Shop Price index rose 2.1% year-on-year in October, slower than the 2.7% rise seen in September. Food inflation eased to 4.2% in the month from 5% in September. Non-food inflation slowed to 0.8% from 1.3% in September.
The BRC said the supermarket price war has had a dramatic effect with food 0.5% cheaper in October than in September, and that retailers are holding down prices despite their own costs going up.
Stephen Robertson, BRC director general, said: “With the overall Shop Price Index of 2.1%, the lowest since December 2010 and less than half the wider Consumer Price Index of 5.2%, it’s clear inflation is not coming from shops. Rising utility, fuel and insurance bills are the big pressures on household budgets.
“The euro zone debt crisis will continue to make currency markets volatile. The impact on sterling, and so import inflation, makes judging the future path of prices a tricky business. Shop inflation should be stable until the end of the year when the effect of last January’s VAT drop out of annual comparisons.”
Mike Watkins, senior manager, retailer services at Nielsen commented:
“Retailers in general are offering more discounts than last year and food retailers in particular are looking to encourage loyalty of shoppers over the next eight weeks. They are complementing big promotions on seasonal food and drink with price cuts on frequently purchased grocery items and also with further cash savings at the checkout.”
