UK shop prices fell further into deflation in October, new figures show, but there were some signs that inflationary pressures might recover in the months ahead.
According to the British Retail Consortium (BRC), shop prices fell 0.8 per cent in the year-to-October, down from 0.6 per cent the previous month.
This put price pressures among food stores and retailers at its lowest level since August 2021.
Source: BRC
The BRC’s figures showed that non-food prices remained firmly in negative territory, falling 2.1 per cent year-on-year.
Discounting for electrical items and DIY tools helped to push price pressures lower, Helen Dickinson, chief executive of the BRC, said.
However, she noted that non-food prices had actually increased 0.1 per cent month-on-month, the first increase since January.
Dickinson pointed out that fashion sales had “finally turned a corner” after heavy discounting over the past year.
Food inflation, meanwhile, slowed to 1.9 per cent in October, down from 2.3 per cent in September. The survey showed easing price pressures in both fresh food and ambient food inflation.
Fresh food inflation decelerated to 1.0 per cent in October, down from 1.5 per cent the month before, while ambient food inflation slipped to 3.1 per cent from 3.3 per cent previously.
Mike Watkins, head of retailer and business insight at NielsenIQ, said that improving conditions in the supply chain had contributed to lower price increases.
Dickinson highlighted progress on meat, fish and tea prices as well as chocolate and sweets.
But she warned that further progress on food inflation was vulnerable to “ongoing geopolitical tensions” as well as “the impact of climate change on food supplies”.
The BRC’s survey will likely bolster calls that the Bank of England can afford to cut interest rates at least once more before the end of the year.
Markets are pricing in a second rate cut in November, but are split on whether officials will opt for another reduction in December.