UK retailers have announced the biggest drop in store prices in three years, as unseasonably wet weather in September prompted stores to offer deep discounts in a bid to attract shoppers.
According to the latest figures from the British Retail Consortium (BRC) and NielsenIQ, shop prices fell by 0.6% year-on-year, compared to a 0.3% fall in August. This represents the largest decline since August 2021.
Helen Dickinson, chief executive of BRC, said: “September was a good month for bargain hunters, as heavy discounts and fierce competition pushed store prices further to contract. Non-food categories, particularly furniture and clothing, saw the biggest falls as retailers sought To attract hesitant shoppers again.
However, Dickinson warned that while the easing of price inflation is welcome news for consumers, geopolitical uncertainty, climate change and government-imposed costs could reverse this trend in the future.
Non-food prices fell by 2.1% year-on-year, a greater decline than the 1.5% recorded in August, and the lowest rate since March 2021. Food inflation, on the other hand, rose slightly to 2.3%, driven by weak food prices. Crops in major producing areas, leading to higher prices for cooking oils and sugar commodities.
Mike Watkins, head of retail and business at NielsenIQ, noted that the downturn in non-food prices should help shoppers manage their household budgets for the rest of the year. However, he stressed that retailers will still need to attract customers with attractive promotions in the run-up to the festive season.
Official data revealed that retail sales volumes increased by 2.5% in August, beating expectations and recording the strongest growth since July 2022. The Office for National Statistics attributed this rise to higher spending on food, clothing, shoes and household goods, supported by warmth. Weather and end-of-season sales.
Ahead of the October 30 Budget, Dickinson called on Chancellor Rachel Reeves to address the “disproportionate tax burden” faced by brick-and-mortar retailers compared to their online counterparts. It urged the introduction of a 20% retail price correction to level the playing field, help brick-and-mortar retailers continue to offer competitive prices, protect jobs, and stimulate investment.
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