Shop price inflation falls to lowest level in more than three years

Shop price inflation has fallen to its lowest level in more than three years as retailers attempt to lure consumers back with discounts and fierce competition, figures show.

Overall prices are now 0.6% cheaper than they were a year ago, down from August’s deflation of 0.3%, according to the British Retail Consortium (BRC)-NielsenIQ Shop Price Index.

Items other than food are 2.1% cheaper than a year ago, a significant drop from August’s deflation of 1.5% and its lowest rate since March 2021.

Furniture and clothing recorded the biggest drops in inflation as retailers tried to entice shoppers back.

However food inflation edged up to 2.3% from 2% in August as poor harvests in key producing regions led to higher prices for cooking oils and sugary products.

Fresh food inflation accelerated to 1.5% from 1% in August.

Discounts

BRC chief executive Helen Dickinson said: “September was a good month for bargain hunters as big discounts and fierce competition pushed shop prices further into deflation.

“Easing price inflation will certainly be welcomed by consumers, but ongoing geopolitical tensions, climate change and government-imposed regulatory costs could all reverse this trend.”

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.”