Introduction: UK food price inflation driven down by grocers’ price warGood morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Food prices in the UK are finally falling, new data this morning shows, thanks to a supermarket price war and easing inflationary pressures.
The British Retail Consortium reports that UK food prices fell by 0.1% during September. That’s the first monthly drop in the cost of food in the shops in over two years.
It brought the annual rate of food price inflation down to 9.9% in September, down from 11.5% in August, and the lowest since August 2022.
Helen Dickinson, OBE, chief executive of the British Retail Consortium, said ”fierce competition between retailers” pulled year-on-year food inflation down to single digits.
Customers who bought dairy, margarine, fish and vegetables – all typically own-brand lines – will have found lower prices compared to last month. Households also benefitted from price cuts for school uniforms and other back-to-school essentials.
Several UK supermarkets have announced rafts of price cuts in recent months, with Tesco squeezing suppliers so it can pass savings on.
Photograph: BRCMore widely, the BRC says prices in British store chains rose at the slowest pace in a year in September, with annual shop price inflation cooling to 6.2% last month from 6.9% in August, its lowest since September 2022.
Annual non-food inflation dropped to 4.4% in September, its lowest since December 2022, and down from August’s 4.7%.
Dickinson predicts shop price inflation to continue to fall over the rest of the year, however there are still many risks to this trend.
They include high interest rates, climbing oil prices, global shortages of sugar, and supply chain disruption from the war in Ukraine.
Food prices have been a key factor pushing up the official UK inflation rate in the last 18 months or so, so the BRC’s figures could indicate the cost of living squeeze is easing.
That will cheer the government, with reports last weekend that Rishi Sunak might call a general election once CPI inflation has dropped below 3%. It was 6.7% in August, having peaked around 11% last year.
Also coming up todayThe highly anticipated criminal trial of Sam Bankman-Fried, former CEO of bankrupt crypto exchange FTX, begins today; he faces seven counts of fraud and conspiracy.
The agenda 8am BST: Spanish unemployment for September
2pm BST: Sam Bankman-Fried’s trial begins in New York
3pm BST: JOLTS US job openings data
3pm BST: IBD/TIPP index of US economic optimism.