In September, food inflation rose notably due to adverse harvest conditions.
- The increase in inflation was driven by rising costs of sugary products and cooking oils.
- Fresh food inflation also experienced an upsurge, whereas ambient food inflation saw a slight decline.
- Overall shop price deflation reached its lowest since August 2021, benefiting price-conscious consumers.
- Retail experts caution that geopolitical issues and regulatory costs could reverse the easing trend.
Food inflation experienced an increase to 2.3% in September, rising from 2% in August. This surge is attributed mainly to inadequate harvests in crucial producing areas, leading to higher prices for items such as sugary products and cooking oils. According to the British Retail Consortium (BRC)-NielsenIQ Shop Price Index, these agricultural challenges have significantly impacted pricing across various food categories.
Mike Watkins, Head of Retailer and Business Insight at NielsenIQ, highlighted that the observed rise in food inflation indicates a stabilisation of shop price inflation, aligning more closely with historical trends. Despite this slight increase, overall shop price deflation continued, reaching 0.6% in September, down from 0.3% in the preceding month. This marks the most considerable annual reduction in shop prices since August 2021.
Fresh food inflation also recorded a notable rise to 1.5% in September, from 1% in the previous month. Meanwhile, ambient food inflation decreased slightly to 3.3%, down from 3.4%, marking its lowest rate since March 2022. Helen Dickinson, Chief Executive of the BRC, described September as an advantageous month for bargain hunters due to the extensive discounts and intense competition, which propelled shop prices into further deflation.
Helen Dickinson also remarked that while easing price inflation is beneficial for consumers, several factors pose a risk to this trend. These include ongoing geopolitical tensions, climate change, and costs imposed by government regulations. She emphasised the need for decisive governmental action in the upcoming budget, suggesting a 20% Retail Rates Corrector to mitigate the disproportionate tax burden on the retail sector.
The interplay of poor harvests, competitive pricing, and regulatory factors continues to shape the landscape of food inflation.
