Wet weather forces retailers to slash prices

UK retailers have reported the biggest fall in shop prices for three years as stores tried to tempt shoppers with big discounts during September’s unseasonably wet weather.
Prices declined year-on-year by 0.6 per cent from a deflationary rate of 0.3 per cent in August, according to data from the British Retail Consortium (BRC) and NielsenIQ. It was the lowest rate since August 2021.
Helen Dickinson, chief executive of the BRC, said: “September was a good month for bargain-hunters as big discounts and fierce competition pushed shop prices further into deflation. This was driven by non-food, with furniture and clothing showing the biggest drops in inflation as retailers tried to entice shoppers back.”
Dickinson said that easing price inflation would be welcomed by consumers but warned that “ongoing geopolitical tensions, climate change and government-imposed regulatory costs could all reverse this trend”.
Prices in the non-food category fell year-on-year by 2.1 per cent after a 1.5 per cent decline the previous month. This was below the three-month average rate of 1.5 per cent and its lowest rate since March 2021.
Food inflation picked up to 2.3 per cent from 2 per cent in August. Dickinson said it had “edged up slightly as poor harvests in key producing regions led to higher prices for cooking oils and sugary products”.
Fresh food inflation accelerated to 1.5 per cent, up from 1 per cent the month before. Ambient food inflation decelerated to 3.3 per cent from 3.4 per cent.
Mike Watkins, head of retailer and business insight at NielsenIQ, said: “With non-food prices in deflation, this will help shoppers as they plan their household budgets for the rest of the year and the slight increase in food inflation is indicative of shop-price inflation stabilising closer to the long-term range. Even so, retailers will still need to focus on driving demand with attractive promotions over the next few weeks.”
Official measures of annual retail sales volumes rose by 2.5 per cent in August, higher than expectations of a rise of 1.5 per cent and the best performance since July 2022. The Office for National Statistics said consumers had spent more on food, clothing, footwear and household goods, helped along by warm weather and discounting at the close of the summer season.
Dickinson called on Rachel Reeves, the chancellor, to level the playing field between online and bricks-and-mortar retailers in the budget on October 30.
She said: “Retail faces a disproportionate tax burden compared with other industries and government must take decisive action in the upcoming budget and introduce a 20 per cent retail rates corrector — a 20 per cent adjustment to bills for all retail properties — to level the playing field. This will allow retailers to continue to offer the best possible prices to their customers while opening shops, protecting jobs and unlocking investment.”