In a positive turn of events, the British Retail Consortium (BRC)-NielsenIQ Shop Price Index has reported a sixth consecutive month of slowing shop price inflation just in time for the festive shopping season.
According to the latest data, store prices dropped from a 5.2% increase in October year-on-year to a more moderate 4.3% in November. This marks the lowest level of shop price inflation since June 2022, providing a potential sigh of relief for consumers preparing for the holiday shopping spree.
Breaking down the figures, food prices experienced a noteworthy decrease from an 8.8% surge in October to a more modest 7.7% in November. This marks the seventh consecutive month of decreasing food price inflation, reaching its lowest level since July 2022. The reduction can be attributed to factors such as lower domestic energy costs associated with fresh food production.
Looking at specific categories, fresh food witnessed a decline from 8.3% in October to 6.7% in November. This decrease, while significant, was proportionately less than the drop observed in the rate for ambient food, falling to 9.2%. The latter was influenced by the cost of importing food against the backdrop of a weaker pound. On the non-food front, inflation eased from 3.4% in October to a more subdued 2.5% in November.
Acknowledging the positive trend, the Chief Executive of the BRC highlighted retailers’ commitment to delivering an affordable Christmas for customers. However, challenges loom on the horizon, including government-imposed increases in business rates and compliance costs, coupled with the anticipated surge in the National Living Wage. These factors may potentially stall or reverse the progress made in curbing inflation, particularly in the food sector.
Providing additional insight, the Head of Retailer and Business Insight at NielsenIQ noted the impact of recent changes in consumer spending habits. He emphasized that non-food retailers may have been reliant on Black Friday to boost sales and avoid heavy discounting in December. Meanwhile, food retailers remain optimistic that footfall will increase as inflation slows, and shoppers embrace the festive mood. Shoppers across all retail sectors are expected to make savings on everyday essentials to offset the expenses associated with the holiday season.
As the nation gears up for the festive season, the positive trend in slowing inflation is anticipated to boost consumer confidence and encourage spending. The reduction in shop prices, particularly in the food sector, is seen as a welcome development for households managing their budgets during this traditionally high-expenditure period.
In conclusion, the latest Shop Price Index paints a promising picture for shoppers heading into the holiday season, with reduced inflation providing much-needed relief. However, the uncertainties that lie ahead underscore the delicate balance retailers face between affordability and the challenges posed by external economic factors.
