UK retailers have significantly reduced prices in September due to unusually wet weather conditions affecting consumer spending.
- Shop prices saw a notable 0.6% decline year-on-year in September, the steepest drop since August 2021.
- Non-food sectors experienced substantial price cuts, with furniture and clothing leading the discounts to attract cautious consumers.
- Despite the drop in non-food prices, food inflation inched up slightly due to unfavorable harvest conditions, impacting items like cooking oils and sugary products.
- In light of these fluctuations, there are calls for government intervention to support brick-and-mortar retail outlets against online competition.
According to recent data from the British Retail Consortium and NielsenIQ, shop prices decreased by 0.6% in September compared to the previous year, marking the most significant decline since August 2021. Helen Dickinson, Chief Executive of the BRC, highlighted, “September was a good month for bargain hunters as substantial discounts and intense competition have driven shop prices further into deflation.” The non-food category was particularly affected, with furniture and clothing sectors experiencing the most significant reductions as retailers aimed to win back hesitant shoppers.
Non-food prices fell 2.1% year-on-year—a deeper cut than the 1.5% drop in August, reaching its lowest rate since March 2021. Meanwhile, food inflation saw a slight rise to 2.3%, influenced by poor harvests in key regions, which elevated the costs of cooking oils and sugary goods. Mike Watkins from NielsenIQ remarked that this deflation in non-food prices would assist shoppers in managing household budgets as the year closes. Yet, he emphasized that enticing promotions will remain crucial for retailers, especially as the holiday season approaches.
Retail sales volumes recorded a 2.5% increase in August, exceeding expectations and achieving the highest growth since July 2022. This boost was ascribed to enhanced expenditure on food, clothing, footwear, and household items, aided by warm weather and end-of-season sales, according to the Office for National Statistics.
In response to these shifts, Helen Dickinson urged Chancellor Rachel Reeves to address the “disproportionate tax burden” affecting physical retailers compared to their online counterparts. She advocated for a 20% retail rates corrector to ensure a fair playing field, supporting traditional retailers in maintaining competitive prices, protecting employment, and fostering investment.
The September price reductions offer temporary relief to consumers, but looming economic uncertainties suggest a need for strategic retail reforms.
