- Retail inflation slows in October.
- Food prices decelerate.
- Retailers face cost challenges.
New data indicates that retail price inflation decelerated for the fifth consecutive month in October, reaching its lowest level since August of last year.
October saw a 5.2% increase in prices compared to the same month last year, a decrease from September’s 6.2% increase, as measured by the British Retail Consortium-Nielsen Shop Price Index.
Food Inflation Decelerates
In October, food inflation decelerated to 8.8 percent, from 9.9 percent in September.
The rate of food price inflation decelerated for the sixth consecutive month in October, with fresh food price inflation falling to 8.3% from 9.6% the previous month.
Factors Behind Inflation Changes
As a result of a weaker pound, persistently high producer costs, and emerging trade frictions, inflation for imported products increased, whereas prices for certain domestically produced foods, such as fruit, were lower than the previous month.
The findings indicate that non-food item inflation decreased from 4.4% to 3.4%, the lowest rate since September of last year.
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In October, prices for children’s and infant apparel also decreased, according to the BRC.
Challenges for Retailers
Helen Dickinson, chief executive officer of the BRC, stated, “In the face of rising transport costs, high interest rates, and other input costs, retailers have struggled to keep prices low for their customers.”
In order to maintain a healthy trajectory of inflation, it is critical that the government refrains from imposing superfluous additional expenses on businesses.
In the absence of prompt intervention from the Chancellor, retailers’ business rates bills will increase by £470 million annually, putting the progress made at risk.” And in the end, consumers would be required to bear the financial burden of the increasing interest rates.
Consumer Behavior
Mike Watkins, chief of retailer and business insight at NielsenIQ, further stated, “While inflation has contributed to the overall sales growth of numerous food retailers this year, consumers have been paying more and purchasing less in practice.”
Additionally, the retail sector as a whole has experienced diminished advantages as a result of the ongoing restraint on discretionary expenditures.
At this time last year, household incomes were under increasing pressure due to accelerating inflation in fuel, energy, and food. Now that inflation is decelerating, an improvement in sentiment over the next eight weeks is required to support retail sales.
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