Shop price inflation eases as retailers boost promotions to spur demand

September saw a moderation in shop price inflation as intensified retailer competition offset the impact of poor harvests and rising global commodity prices. Food price growth slowed to 2.5% from 2.8% in August, while fresh food inflation fell to 2.6%, and non-food inflation edged down to 0.8% despite remaining above the three-month average. Strong discounting on back-to-school goods such as books, stationery, footwear and electronics drove the decline.

Helen Dickinson, chief executive of the British Retail Consortium, said retailers have been absorbing successive cost pressures but can only do so to a point, calling on the Chancellor to freeze rate rises and scrap the business rates surtax. Mike Watkins of NIQ added that ongoing promotions and selective price cuts are helping keep inflation lower than a year ago, though the fourth quarter is likely to bring tighter household budgeting, requiring retailers to continue absorbing costs where possible.