British retailers cut prices in October for the first time since March, led by the steepest fall in food costs in nearly five years, according to the British Retail Consortium (BRC).
- Shop prices declined 0.3% from September, while food prices dropped 0.4%, the biggest monthly fall since December 2020.
- On an annual basis, overall shop prices were 1.0% higher than a year earlier, easing from a 1.4% rise in September, marking the first slowdown in the annual pace of price increases since June.
Food inflation cooled to 3.7% year-on-year from 4.2%, though fresh food costs continued to rise. The Bank of England, which closely watches food prices due to their influence on public inflation expectations, may take some comfort from the data following official figures last week showing headline inflation steady at 3.8%.
BRC Chief Executive Helen Dickinson attributed the decline to fierce retail competition, heavy discounting, and a drop in global sugar prices, which lowered costs for chocolate and confectionery ahead of Halloween. Retailers also began early promotions on electronics and beauty products in the run-up to Black Friday.
Dickinson urged Finance Minister Rachel Reeves not to raise taxes on the retail sector in the November 26 budget, warning that additional costs “would inevitably keep inflation higher for longer.” Reeves has said her fiscal plan will aim to reduce the cost of living.
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The first decline in UK shop prices since March may strengthen the case for a December Bank of England rate cut, supporting expectations that inflation pressures are easing. Sterling could face modest headwinds as traders price in a more dovish policy outlook.
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