Prices in British store chains rose at the slowest pace in a year in September, according to industry data released by the British Retail Consortium (BRC). This news adds to the signs that the UK’s high inflation rate is set to continue its recent decline.
The BRC reported that annual shop price inflation cooled to 6.2% last month from 6.9% in August, marking its lowest level since September 2022. Notably, food price inflation fell for the fifth consecutive month to 9.9% from 11.5%. Furthermore, it was the first time in over two years that food prices had decreased in month-on-month terms. Non-food inflation also eased, dropping to an annual rate of 4.4% from 4.7%.
Helen Dickinson, Chief Executive of the BRC, commented on the data, stating, “We expect shop price inflation to continue to fall over the rest of the year.” However, she added that there were still several risks that could impact this trend, including high interest rates, climbing oil prices, global sugar shortages, and supply chain disruption resulting from the conflict in Ukraine.
The BRC’s shop price inflation measure is considered an early indicator for the broader official consumer price index (CPI). The CPI, which peaked at over 11% in October 2021, fell to 6.7% in August 2022. The Bank of England, which has implemented 14 consecutive interest rate increases, paused its run of rate hikes in September. The central bank has emphasized the importance of maintaining high interest rates in order to alleviate inflation pressures within the economy.
The recent data from the BRC provides some optimism for consumers who have been grappling with rising prices. However, it is important to note that there are still potential challenges ahead that could impact inflation levels. The ongoing conflict in Ukraine and the resulting supply chain disruptions are significant factors to consider. Additionally, high interest rates and climbing oil prices could pose further risks to the declining inflation rate.
As the BRC’s shop price inflation measure is seen as an early signal for the broader consumer price index, economists and policymakers will closely monitor future data to assess the trajectory of inflation in the UK. The Bank of England’s decision to pause its rate hikes in September reflects a cautious approach as it aims to strike a delicate balance between controlling inflation and supporting economic growth.
The decline in shop price inflation may bring some relief to consumers, but the challenges mentioned by Helen Dickinson highlight the uncertainties that lie ahead. As the UK continues to navigate through a complex economic landscape, the focus will now shift to whether these declining inflation trends can be sustained in the coming months.
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