Prices in British Shops Fall at Fastest Rate in Over Three Years

LONDON (Reuters) – Prices in British shops fell at the fastest pace in more than three years in September, according to the British Retail Consortium (BRC) on Tuesday. This decline adds to indications that the inflation squeeze on consumers has lessened.

Annual shop price deflation dropped to 0.6% in the 12 months leading up to September, marking its weakest since August 2021 and slowing from a 0.3% drop in the previous month.

This was the seventh instance in the past nine months where the rate of price growth has weakened.

Non-food deflation fell to 2.1%, down from a reduction of 1.5% in August.

Helen Dickinson, BRC’s chief executive, stated, “Easing price inflation will certainly be welcomed by consumers, but ongoing geopolitical tensions, climate change, and government-imposed regulatory costs could all reverse this trend.”

Meanwhile, food price inflation increased to 2.3% from 2.0%; this rise was attributed to poor harvests in critical farming areas, leading to higher prices for cooking oil and sugar.

Official figures revealed that consumer price inflation remained steady at 2.2% for the second consecutive month in August, significantly lower than the 41-year high of 11.1% recorded in October 2022.

However, services inflation, a closely monitored indicator of underlying inflation pressure by the Bank of England, edged up.

The central bank is anticipated to reduce borrowing costs in November after maintaining its key interest rate at 5% in September.

Bank of England policymaker Megan Green mentioned last month that there is a risk of weak consumer demand rebounding more than the central bank has expected.

Consumer surveys indicate that many households are cautious about potential tax hikes in finance minister Rachel Reeve’s first annual budget later this month.