Price inflation at British food retailers fell 2.1% in October from 2.7% in September, reflecting effect of supermarket price wars: British Retail Consortium

Cindy Allen

LONDON , November 10, 2011 (British Retail Consortium) – Overall shop price inflation fell to 2.1% in October from 2.7% in September. Food inflation fell to 4.2% in October from 5.0% in September. Non-food inflation fell to 0.8% in October from 1.3% in September.

Stephen Robertson, British Retail Consortium Director General, said:

"The supermarket price war has had a dramatic effect. Food was 0.5 per cent cheaper in October than September. March saw an equivalent fall but there's been no bigger month-on-month drop in prices for over two years. As the competitive battle intensifies, retailers are holding down shop prices despite their own costs, including energy, property and what they pay suppliers, going up.

"With the overall Shop Price Index of 2.1 per cent the lowest since December 2010 and less than half the wider Consumer Price Index of 5.2 per cent, it's clear inflation is not coming from shops. Rising utility, fuel and insurance bills are the big pressures on household budgets.

"The euro zone debt crisis will continue to make currency markets volatile. The impact on sterling, and so import inflation, makes judging the future path of prices a tricky business. Shop inflation should be stable until the end of the year when the effect of last January's VAT drop out of annual comparisons."

Mike Watkins, Senior Manager, Retailer Services, Nielsen comments:
"Christmas shopping, is now underway and shoppers are having to make their spending money go further this year. So it's encouraging to see shop price inflation falling this month.

"Retailers in general are offering more discounts than last year and food retailers in particular are looking to encourage loyalty of shoppers over the next eight weeks. They are complementing big promotions on seasonal food and drink with price cuts on frequently purchased grocery items and also with further cash savings at the checkout."

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