Food Price Inflation Slows for 1st Time in 2 Years: Trade Association

A woman holds a shopping basket of groceries in Cardiff, Wales, on May 22, 2022. Matthew Horwood/Getty Images

Food prices dropped in September for the first time in over two years amid the overall easing of shop price inflation, a British Retail Consortium (BRC) report has revealed.

Britons were able to benefit from lower prices last month, as food and non-food inflation has dropped, the BRC said on Tuesday, calling it a “win” for consumers.

In food categories, the data showed easing from 11.5 percent inflation in August to 9.9 percent in September. This is the lowest rate since August 2022.

Price growth in fresh foods slowed from 11.6 percent to 9.6 percent, reaching the lowest rate in almost two years.

Ambient foods, which include items like bread, cereal, and canned goods, were less expensive in September compared to August, and at the lowest price since November last year.

Chief Executive of the BRC Helen Dickinson attributed the positive trend to a “fierce competition between retailers.”

“Customers who bought dairy, margarine, fish and vegetables – all typically own-brand lines – will have found lower prices compared to last month,” Ms. Dickinson said in a statement.

She said that households across the country were able to enjoy price cuts for school uniforms and other back-to-school essentials.

‘Things Are Tough’

The September figures will bring relief to Prime Minister Rishi Sunak’s government, which aims to bring down inflation to around 5 percent by the end of the year and alleviate the pressures of the cost-of-living crisis.

The news comes at a time when the Conservative Party hosts its annual conference in Manchester. The cost-of-living crisis is the subject of multiple events at the conference. This includes discussions on “supporting people through hardships” and “how can the Conservatives keep voters hit by the crisis.”

The prime minister is pressed to deliver on the government’s promise to halve inflation by the end of 2023 and secure votes for a potential general election in 2024.

Britain's Prime Minister Rishi Sunak tours the Exhibitor's Hall on day 3 of the Conservative Party Conference in Manchester, England, on Oct. 3, 2023. Carl Court/POOL/AFP via Getty Images

Speaking to a “Good Morning Britain” presenter at the conference, Mr. Sunak acknowledged that “things are tough” for British families.

When given an example of a retired man called Bill who struggled to pay his bills and considered going to a food bank, the prime minister said, “The best way for me to help Bill and everyone else is to stick to our plan and bring inflation down.”

More than 760,000 people used a food bank run by the charity the Trussell Trust for the first time in 2022/23, according to House of Commons research, in a 38 percent increase from 2021/22.

The increased cost of living has spurred household food insecurity, the research said.

The percentage of “food insecure” households, where people eat less or go a day without eating because they can’t access or afford food, increased in the UK from 8.8 percent in January 2022 to 17 percent in June.

“The food inflation slowdown in September is good news,” said Mike Watkins, head of retailer and business insight at NielsenIQ.

However, he added that over half of the households are still feeling the impact of continued increases in the cost of living.

Calculated Shopping

It is important that retail sales “keep momentum” and Britons can keep accessing less expensive goods and promotional offers, Mr. Watkins added.

Looking ahead, the BRC said it expects shop price inflation to keep dropping over the rest of the year.

High interest rates, climbing oil prices, global shortages of sugar, as well as supply chain disruption from the war in Ukraine, will make it more difficult, acknowledged Ms. Dickinson.

As shoppers become more calculated and aware of their expenses, retailers could face extra pressure in the final quarter of the year. This is when retailers typically see sales spikes in the build-up to Christmas.

According to head of retail at KPMG, Paul Martin, high interest rates put pressure on households to spend “cautiously,” so savvy shoppers will be Christmas bargain hunting much earlier this year.