UK Shop Prices Experience Largest Decline Since August 2021, Survey Reveals

Prices in British Shops Decline at Notable Rate

LONDON – According to the British Retail Consortium, prices in British shops experienced their most significant decline in over three years during September, signaling a reduction in the inflationary pressures affecting consumers.

The annual rate of shop price deflation fell to 0.6% over the 12 months leading up to September, marking the lowest rate since August 2021 and a decrease from the 0.3% decline recorded the previous month. This represents the seventh instance in nine months where the rate of price growth has diminished.

In a sector breakdown, non-food items saw a deflation of 2.1%, compared to a decrease of 1.5% in August. BRC Chief Executive Helen Dickinson noted that while lower inflation rates are beneficial for consumers, various factors such as ongoing geopolitical tensions, climate change, and regulatory costs imposed by the government could potentially reverse this trend.

On the other hand, food price inflation increased to 2.3% from 2.0%, with Dickinson attributing this rise partly to poor harvests in significant agricultural regions, which have led to increased prices for essential items like cooking oil and sugar.

Official statistics indicated that consumer price inflation remained steady at 2.2% for August, maintaining this level for two consecutive months and significantly lower than the 41-year peak of 11.1% recorded in October 2022. However, inflation in services, a key indicator monitored by the Bank of England for underlying pressure, has edged upward.

The central bank is anticipated to lower borrowing costs in November after keeping its main interest rate at 5% in September. Policymaker Megan Green recently expressed concern regarding the potential for weak consumer demand to rebound more strongly than the Bank has projected.

Surveys among consumers reveal that many households are exercising caution in light of potential tax increases anticipated in Finance Minister Rachel Reeve’s first annual budget later this month.