Shop prices in the UK fell for the first time in seven months as supermarkets and retailers stepped up discounting across key grocery categories, according to the British Retail Consortium (BRC).
The BRC–NielsenIQ shop price index declined by 0.3% month on month in October, marking the first overall fall since March. Year on year, prices rose by 1.0%, down from 1.4% in September — the slowest annual rate of shop-price inflation since late 2021.
Food prices dropped by 0.4% compared with September, the sharpest monthly fall since December 2020. Annual food inflation eased to 3.7%, from 4.2%, as supermarkets cut prices on packaged groceries, snacks, and confectionery. The BRC said falling global sugar prices and pre-Halloween promotions contributed to the slowdown.
“Adding further taxes on retail businesses would inevitably keep inflation higher for longer,” said Helen Dickinson, Chief Executive of the British Retail Consortium. “Retailers are working hard to keep prices down for customers, but government policy has a direct impact on how far they can go.”
The retail sector continues to face weak consumer demand despite easing prices. The Confederation of British Industry (CBI) reported a retail sales balance of -27 in October, a slight improvement on -29 in September but still marking a thirteenth consecutive month of declining volumes. The CBI attributed the trend to cautious consumer spending ahead of the government’s 26 November Budget.
For the Bank of England, the data offers a modest sign of disinflation, supporting hopes that easing goods prices could help stabilise overall inflation expectations. Yet the broader picture remains uneven: while packaged foods became cheaper, fresh produce and household goods continued to edge higher.
Analysts said the October dip could signal a slower inflation trend but warned that further improvement will depend on how long retailers can sustain promotions while managing energy, wage, and rental costs.
Retailers are balancing the need to attract shoppers through lower prices with the challenge of preserving already-thin margins. “Consumers are still cautious, and retailers are discounting to drive volume,” one industry economist told Reuters. “The test will be whether that can be maintained through the Christmas period.”
For households, the relief may prove limited. With wage growth flattening and everyday items still priced above pre-pandemic levels, the latest easing may reduce headline inflation without materially improving purchasing power.
The October figures nonetheless offer a small reprieve for the Treasury and the Bank of England as they prepare for the next fiscal and monetary decisions. Whether this marks the start of a sustained downward trend or a temporary pause in inflationary pressure remains to be seen.
