September witnessed significant price cuts by UK retailers due to wet weather affecting consumer spending.
- Shop prices experienced a 0.6% decline in September, the largest since August 2021.
- Non-food items, including furniture and clothing, saw the most substantial price drops.
- Food inflation rose slightly, driven by poor harvests and increased cooking oil prices.
- Retail sales rebounded in August, with a 2.5% increase, fueled by favorable weather and seasonal sales.
In September, UK retailers responded to decreased consumer spending induced by adverse weather conditions by implementing substantial discounts. According to recent data from the British Retail Consortium (BRC) and NielsenIQ, shop prices declined by 0.6% on a year-on-year basis, marking the most significant drop since August 2021. Helen Dickinson, the chief executive of the BRC, noted that September proved favorable for consumers seeking bargains as intense competition among retailers drove prices down further into deflation.
The non-food sector, especially in categories such as furniture and clothing, experienced the most pronounced price reductions as retailers attempted to entice cautious shoppers. Non-food prices decreased by 2.1% year-on-year, surpassing the 1.5% reduction observed in August, and reaching their lowest point since March 2021. However, Helen Dickinson cautioned that while the easing of price inflation benefits consumers, the potential impact of geopolitical uncertainties, climate change, and government-imposed costs might reverse this trend in the future.
Conversely, food inflation witnessed a slight increase, reaching 2.3%, largely due to suboptimal harvests in crucial agricultural regions. This has specifically affected prices for cooking oils and sugary products. Mike Watkins, head of retailer and business insight at NielsenIQ, emphasized that the deflation in non-food prices could aid consumers in managing their household budgets for the remainder of the year. He highlighted the necessity for retailers to continue captivating customers with appealing promotions as the festive season approaches.
Retail sales volumes showed a robust rebound in August, achieving a 2.5% rise, which exceeded anticipations and marked the strongest growth since July 2022. The Office for National Statistics attributed this upsurge to heightened expenditures on food, clothing, footwear, and household commodities, driven by favorable weather and end-of-season discounts.
Ahead of the October 30 budget, Helen Dickinson urged Chancellor Rachel Reeves to address the pressing ‘disproportionate tax burden’ on brick-and-mortar retailers as opposed to their online counterparts. She advocated for a 20% retail rates corrector to establish equity, enable physical retailers to maintain competitive pricing, protect employment, and encourage investment.
The fluctuations in retail pricing and sales volumes underline the dynamic nature of the UK retail market amid external pressures.
