AUS
NZ
UK
CA
USA
IND
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Highlights:
- Retail prices have declined for a third consecutive month, marking the fastest fall in over three years.
- Non-food items are leading deflation, with a 2.1% drop for two months running, while food inflation continues but at a reduced rate.
- The British Retail Consortium urges a 20% cut in business rates as a buffer against geopolitical and regulatory challenges.
Retail prices in the UK have decreased for the third consecutive month, adding pressure on the Bank of England to consider an interest rate cut at its upcoming meeting. The British Retail Consortium (BRC) reported that retail prices fell by 0.8% in October year-on-year, accelerating from a 0.6% decline in September. This marks the fastest retail price drop since March 2021 and reflects a deflationary trend across the sector, particularly in non-food items.
Non-food prices are driving this deflation, with prices down by 2.1% for two months running, marking the lowest rate in over two years. Key categories such as electronics, including mobile phones, and DIY materials saw significant price cuts as retailers took advantage of recent recovery in the housing market to offer discounts. BRC Chief Executive Helen Dickinson noted that the pick-up in fashion sales this autumn has also shifted the trend slightly, as retailers eased some of the substantial discounts seen in recent months, nudging fashion prices slightly upwards for the first time since January.
Food prices, however, remain on an upward trajectory, although the pace has slowed. Food inflation eased to 1.9% in October, down from 2.3% in September, marking the slowest increase in food prices since late 2021. Within the food sector, fresh products have seen slower price rises than shelf-stable goods, with fresh food prices increasing by 1.0% compared to a 3.1% rise in non-perishable items. Dickinson attributed this to seasonal promotions on products like meat, fish, chocolate, and tea, especially as retailers offered deals around Halloween.
Despite the positive trend in retail prices, Dickinson highlighted potential risks to further reductions. She pointed out that external factors, including ongoing geopolitical tensions, climate change impacts on food supplies, and costs associated with planned government regulations, could disrupt the current trajectory. To safeguard against these pressures, Dickinson has called on the government to implement a 20% reduction in business rates for retail properties in the upcoming Budget announcement.
As the retail sector navigates these mixed signals, all eyes are now on the Bank of England’s decision, with recent price data adding weight to arguments in favor of easing interest rates to support economic stability.
