UK retailers reported the biggest drop in retail prices in three years as unseasonably wet weather in September forced stores to offer significant discounts in a bid to attract shoppers.
According to the latest figures from the British Retail Consortium (BRC) and NielsenIQ, retail prices fell by 0.6% year-on-year, compared with a 0.3% drop in August. This marks the biggest drop since August 2021.
Helen Dickinson, chief executive of the BRC, said: “September was a good month for bargain hunters as deep discounts and strong competition pushed store prices down. Non-food categories, particularly furniture and clothing, fell sharply as retailers sought to attract reluctant buyers.
However, Dickinson warned that while lower inflation is welcome news for consumers, geopolitical uncertainty, climate change, and government spending could reverse this trend in the future.
Non-food prices fell 2.1% year-on-year, much lower than the 1.5% seen in August, and the lowest level since March 2021. On the other hand, food inflation rose slightly to 2.3%, driven by the poor. yield in key producing areas, which has increased the prices of cooking oil and sugary goods.
Mike Watkins, head of retail and business intelligence at NielsenIQ, noted that lower non-food prices will help consumers manage their household budgets through the end of the year. However, he emphasized that retailers will still need to entice customers with attractive promotions in the run-up to the Christmas holidays.
Official data showed that retail sales rose by 2.5% in August, beating expectations and marking the strongest growth since July 2022. The Office for National Statistics attributed this increase to spending on food, clothing, footwear, and household goods, influenced by warming. weather and end of season sales.
Ahead of the October 30 budget, Dickinson called on Chancellor Rachel Reeves to address the “disproportionate tax burden” brick-and-mortar retailers face compared to their online counterparts. He called for the introduction of a 20% price adjustment mechanism to level the playing field, help auto dealers continue to offer competitive prices, protect jobs, and encourage investment.
