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Industry data showed on Tuesday that UK retail inflation fell to its lowest in a year in September as food price growth slowed sharply to single digits.
According to data released by trade body the British Retail Consortium, store prices increased at an annual rate of 6.2% last month, down from 6.9% in August and the lowest level since September 2022.
Falling retail inflation is good news for the economy. Lower price increases could help boost consumer spending and business activity as record wage growth lifts household incomes.
Households benefited from price cuts on school uniforms and other back-to-school necessities, with non-food inflation falling to 4.4% in September, the lowest level since December 2022, down from 4.7% in August.
Data showed that annual food inflation fell to 9.9% in September, falling to single digits for the first time since August last year after five consecutive months of declines and down from a historical peak of 15.7% in April.
The BRC also reported that food prices fell 0.1% in August-September, the first month-on-month fall in more than two years, which the trade body attributed to “intense competition among retailers”.
Helen Dickinson, chief executive of the British Retail Consortium, said: “Customers buying dairy products, margarine, fish and vegetables – often own brand brands – will find prices lower than last month.”
Falling food price inflation will provide significant relief to Britain’s poorest households, which spend a large proportion of their income on necessities and have been hit hard by soaring food and energy costs following Russia’s invasion of Ukraine in February 2022.
“It’s good news that food inflation continues to slow as supermarkets have further cut prices in recent weeks,” said Mike Watkins, director of retailer and business insights at Nielsen IQ, who helped compile the data.
BRC data shows that fresh food inflation, the main driver of retail price growth in the past year, also slowed to 9.6% from 11.6% last month, the lowest level since July 2022. It peaked at 17.8% in April.
Inflation for so-called ambient foods – items that can be stored at room temperature – remained in double digits last month at 10.4%, but was down from a peak of 13.1% in May.
Food and non-alcoholic beverage inflation fell to 13.6% in August from 14.8% in July, after hitting a 45-year high of 19.2% in March, according to official data. The BRC data preceded government statistics that showed inflation will continue to slow this month.
However, despite the decline, UK food inflation remains well above the US rate of 4.3% and the Eurozone rate of 8.8%.
Dickinson said she expected store price growth to continue to slow for the rest of the year, but warned there were “many risks” to this, including “high interest rates, rising oil prices, a global sugar shortage and supply chain disruption from the war in Ukraine”.
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