BRC – NIELSEN SHOP PRICE INDEX – October 2018

Period Covered: 01 - 05 October 2018

  • Following two months of mild inflation, shop prices are back in deflationary territory in October. Year-on-year, prices have decreased by 0.2%, compared to the 0.2% increase seen in September.   
     
  • Non-food deflation deepened in October to 1.1% from 0.9% in September.
     
  • Food inflation slowed to 1.3% in October from 1.9% in both September and August.  
     
  • Fresh food inflation decelerated to 1.0% in October from 1.6% in September.
     
  • Ambient food inflation slowed to 1.8% in October from 2.4% in September.
     
  • The cooling of global food prices, particularly of meat and dairy products, has started filtering through into Shop Price Inflation. Prices of vegetables are also falling: although the hot dry weather in the summer is still pushing up on the prices of some domestically grown products, as we move into a period of greater reliance on imported fresh produce the impact on the overall vegetable price index is weaker.
     
  • The deepening deflation of non-food reflects a return to the recent trend, in which the strength of competition in the face of weak consumer demand has led retailers to keep prices low and falling. This acceleration in the pace at which prices are falling comes after a few months in which changes to promotional strategies pushed non-food prices closer to inflation.

Helen Dickinson OBE, Chief Executive, British Retail Consortium:

“As we approach the Christmas period, retailers are facing stiff competition; driving down the prices of many goods including clothing and electricals. This comes at a particularly difficult time, with lower consumer demand, a weak pound and rising public policy costs all putting pressure on retail margins.

“Monday’s Chancellor’s Budget did not go far enough to alleviate the unsustainable pressures being exerted on businesses large and small. With numerous household names disappearing from the high street, it is clear that the burden of business rates is simply too high and this unsustainable system needs urgent reform to enable the successful reinvention of our high streets into modern and diverse places where people want to spend more time.”

Mike Watkins, Head of Retailer and Business Insight, Nielsen:

“The inflationary cost pressures in the supply chains are being managed by the industry which tempered the recent upward pressure of shop price inflation in October. Non-food continues to show deflation with discounting continuing, especially within discretionary items. Consumers remain uncertain about when and where to spend and with Christmas promotions now kicking in, competition for share of wallet will intensify in both food and non-food retailing. And after a slow start to the quarter and with CPI remaining above the Bank of England target, we can expect retailers to offer some additional incentives to encourage shoppers to spend.”