In a challenging September, UK retailers reduced prices amid adverse weather conditions.
- Shop prices noted a significant decline, marking the sharpest drop since August 2021.
- Non-food prices, particularly in furniture and clothing, saw noteworthy reductions.
- Food inflation experienced a slight increase due to poor harvests affecting certain products.
- Retail sales volumes rose by 2.5% in August, thanks to increased consumer spending.
In September, UK retailers faced adverse weather conditions that significantly impacted consumer spending patterns. This led to a marked decline in shop prices, which dropped by 0.6% year-on-year, according to recent figures from the British Retail Consortium (BRC) and NielsenIQ. This decline, the sharpest since August 2021, highlighted a trend as retailers engaged in intense competition and offered notable discounts to draw cautious shoppers.
The non-food sector experienced the most dramatic price declines, with costs decreasing by 2.1% year-on-year, a steeper drop than the 1.5% recorded in August. Furniture and clothing retailers, in particular, slashed prices more aggressively as they attempted to attract consumer attention and encourage spending. Helen Dickinson, chief executive of the BRC, commented on the trend, noting that despite the positive aspects of reduced price inflation for consumers, potential challenges remain, including geopolitical uncertainties and climate change.
Conversely, food inflation saw a slight increase to 2.3%. This rise was attributed to poor harvests in some key production areas, which subsequently elevated prices for products like cooking oils and sugary items. While non-food price deflation offered some relief to consumer budgets, the increase in food costs could potentially impact household expenditure.
August retail sales data revealed a 2.5% growth, surpassing expectations and representing the highest increase since July 2022. This growth was attributed to increased spending on food, clothing, footwear, and household goods, buoyed by favourable weather and end-of-season sales. Retail experts suggest that this positive trend could influence consumer behaviour in the coming months, despite the current economic challenges.
In light of these developments, Helen Dickinson called on the Chancellor, Rachel Reeves, to address the ‘disproportionate tax burden’ facing physical retailers compared to online sellers. The proposed introduction of a 20% retail rates corrector aims to level the playing field, enabling brick-and-mortar shops to maintain competitive pricing, protect employment, and stimulate further investment in the sector.
The UK’s retail landscape is navigating significant changes, balancing price strategies with economic pressures.
