The wet weather in September significantly influenced UK retailing strategies, leading to notable price reductions.
This trend is underscored by the latest data from the British Retail Consortium (BRC) and NielsenIQ, showcasing a substantial change in consumer spending patterns.
According to recent figures from the BRC and NielsenIQ, shop prices dropped by 0.6% year-on-year, compared to a 0.3% fall in August. This marks the sharpest decline since August 2021. Helen Dickinson, Chief Executive of the BRC, commented, ‘September was a good month for bargain hunters as big discounts and fierce competition pushed shop prices further into deflation.’ Non-food categories, particularly furniture and clothing, experienced the largest drops.
Non-food prices fell by 2.1% year-on-year, a more significant drop than the 1.5% seen in August, recording the lowest rate since March 2021. Although this deflation benefits consumers, it indicates retailers’ struggle to attract hesitant shoppers.
Mike Watkins, Head of Retailer and Business Insight at NielsenIQ, noted that the deflation in non-food prices would assist shoppers in managing their household budgets for the remainder of the year.
On the other hand, food inflation rose slightly to 2.3%, driven by poor harvests in key producing regions. This increase affected prices for cooking oils and sugary goods.
While consumers may welcome falling non-food prices, the rise in food inflation presents a mixed outlook for household budgets.
Official data revealed that retail sales volumes increased by 2.5% in August, surpassing expectations and marking the strongest growth since July 2022. The Office for National Statistics attributed this rise to higher spending on food, clothing, footwear, and household goods, buoyed by warm weather and end-of-season sales.
The increase in retail sales volume indicates a surge in consumer spending, despite the challenges posed by fluctuating prices.
Helen Dickinson cautioned that while easing price inflation is welcome news for consumers, geopolitical uncertainties, climate change, and government-imposed costs could reverse this trend in the future.
Ahead of the October 30 budget, Dickinson urged Chancellor Rachel Reeves to address the ‘disproportionate tax burden’ faced by brick-and-mortar retailers compared to their online counterparts.
Mike Watkins emphasized that retailers would need to entice customers with attractive promotions in the lead-up to the festive season, despite the current deflation in non-food prices.
Such strategic promotions are crucial for maintaining consumer interest and driving sales during a critical period for the retail sector.
Dickinson called for the introduction of a 20% retail rates corrector to level the playing field, helping physical retailers continue offering competitive prices, safeguard jobs, and stimulate investment.
The price reductions in September, driven by wet weather, brought significant relief to consumers amidst rising food inflation.
Retailers must continue to navigate economic challenges with strategic promotions and policy support to sustain consumer interest and market stability.
