Shop Price Inflation Hits Three-Year Low
Even with cheaper prices overall, consumer confidence took a nosedive in September before the October budget announcements.
Shop price inflation has hit its lowest point in over three years, driven by significant discounts and intense competition, as revealed by the latest data.
September proved to be a great month for bargain hunters, with the British Retail Consortium (BRC) and NielsenIQ Shop Price Index showing that consumers enjoyed cheaper prices, down by 0.6 percent compared to a year ago.
Last month’s figures were an improvement from August, which saw a 0.3 percent deflation in shop prices. BRC Chief Executive Helen Dickinson noted that monthly prices have been declining in seven of the last nine months.
The decrease in shop price inflation was primarily driven by retailers offering significant discounts to attract shoppers, especially in non-food categories like furniture and clothing. Food prices, on the other hand, slightly increased due to challenges in key producing regions.
The non-food inflation rate was at its lowest since March 2021, with goods being 2.1 percent cheaper in September, lower than the previous month’s deflation rates.
Food prices saw a 2.3 percent increase in September, higher than August’s rates but still at a relatively low level compared to previous months.
Despite the slight increase in food prices, the BRC noted that the annual rate remained low, signaling stability. The Fresh foods category saw price hikes while ambient foods experienced a slight monthly drop.
Looking ahead, BRC Chief Executive Helen Dickinson urged the government to consider adjusting retail sector taxation before the upcoming October Budget.
Mike Watkins, Head of retailer and business insight at NielsenIQ, emphasized the need for retailers to focus on attractive promotions to drive demand in the coming weeks.
Consumer Confidence
Despite the decrease in shop price inflation, consumer confidence took a significant hit in September, according to GfK’s Consumer Confidence Index.
The index tracks consumer attitudes towards personal financial situations, the economy, and major purchases, all of which declined compared to the previous month. Neil Bellamy, consumer insights director at GfK, expressed concerns about the implications of this drop in confidence.
It’s crucial for consumer confidence to remain strong to support economic growth and spur consumer spending, especially with potential cuts in government spending on the horizon.
