British retailers have reported the biggest fall in retail prices in three years as unusually wet weather in September prompted stores to offer significant discounts in a bid to attract customers.
According to the latest figures from the British Retail Consortium (BRC) and NielsenIQ, retail prices fell 0.6% year-on-year, compared to a 0.3% decline in August. This is the sharpest decline since August 2021.
Helen Dickinson, CEO of the BRC, said: “September was a good month for bargain hunters as deep discounts and fierce competition pushed retail prices further into deflation. Non-food categories, particularly furniture and clothing, saw the biggest declines as retailers tried to lure back hesitant buyers.”
However, Dickinson warned that while declining price inflation is welcome news for consumers, geopolitical uncertainties, climate change and government-imposed costs could reverse this trend in the future.
Non-food prices fell by 2.1% year-on-year, a more significant decline than the 1.5% in August, and the lowest since March 2021. On the other hand, food inflation rose slightly to 2.3%, driven by poor countries. harvests in key production regions, driving up prices for cooking oil and sugary goods.
Mike Watkins, head of retailer and business insight at NielsenIQ, noted that the deflation in non-food prices would help shoppers keep their household budgets in check for the rest of the year. However, he emphasized that retailers still need to entice customers with attractive promotions in the run-up to the holidays.
Official data shows retail sales rose 2.5% in August, exceeding expectations and marking the strongest growth since July 2022. The Office for National Statistics puts this increase down to higher spending on food, clothing, shoes and household goods, boosted by warm temperatures. weather and end of season sales.
Ahead of the October 30 Budget, Dickinson called on Chancellor Rachel Reeves to tackle the “disproportionate tax burden” faced by brick-and-mortar retailers compared to their online counterparts. She urged the introduction of a 20% adjustment factor for retail rates to level the playing field so that brick-and-mortar retailers can continue to offer competitive prices, secure jobs and stimulate investment.