Shop price inflation eased slightly in September as retailers ramped up promotions, despite facing mounting financial pressure.
Annual shop price inflation slowed to 1.4 per cent in September, down from 1.5 per cent in August, according to the latest BRC-NIQ Shop Price Index. The figure remained slightly above the three-month average of 1.3 per cent.
Food inflation also cooled, falling to 2.5 per cent from 2.8 per cent the previous month, as promotional activity helped reduce the price of meat and dairy products.
However, poor harvests across Europe pushed up fruit prices, while elevated commodity costs continued to feed through into chocolate and confectionery.
Non-food inflation edged down to 0.8 per cent from 0.9 per cent, with heavy discounting on back-to-school products helping to keep prices in check.
The figures mark a slight easing from August, when shop price inflation hit a two-year high of 1.5 per cent, up sharply from 0.9 per cent in July. Food inflation had also accelerated to 2.8 per cent during the month.
British Retail Consortium chief executive Helen Dickinson warned that retailers were continuing to absorb substantial increases in their cost base.
“Retailers have absorbed wave after wave of extra costs, but there is a limit to what businesses can shoulder,” she said.
The BRC said businesses face further pressure from higher employment costs, energy bills, packaging taxes and changes to business rates due next April.
Dickinson called for measures in the government’s 28 October Budget to reduce the burden of business rates and help retailers limit further price rises.
The moderation in shop prices comes against a broader inflationary backdrop. UK consumer price inflation rose to 3.1 per cent in August, while energy costs remain a key source of uncertainty for both businesses and households.
Earlier this summer, the BRC had warned that retailers were already contending with rising National Insurance costs, packaging levies and higher input prices linked to extreme weather and geopolitical disruption, despite fierce competition keeping shop price rises relatively contained.
The latest BRC-NIQ figures are based on prices collected between 1 and 7 September.
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