UK shop price inflation slows to 1.4% as retailers ramp up promotions
Shop prices rose 1.4% year on year in September, down from 1.5% in August, as UK retailers increased promotions to stimulate demand, according to the British Retail Consortium and NIQ.
Shop price inflation in the United Kingdom eased to 1.4% in the year to September, down from 1.5% in August, as retailers stepped up promotional activity to encourage consumer spending, according to data from the British Retail Consortium and NIQ.
The slowdown reflects a deliberate strategy by retailers to drive demand through discounts and special offers, rather than a broad-based fall in underlying cost pressures. The BRC-NIQ shop price index, which tracks changes in the prices of goods sold in UK shops, shows that overall shop prices remain above levels seen a year ago, but the pace of increase has moderated.
Food price inflation has been a particular focus for households and policymakers, with retailers facing pressure to keep essential items affordable while managing their own rising costs. The use of promotions and loyalty schemes has become a key tool for supermarkets and other retailers seeking to retain customers who have become more price-sensitive amid the cost-of-living squeeze.
The BRC has previously highlighted that while input costs for retailers have shown some signs of easing, factors such as energy prices, labour costs and supply chain disruptions continue to pose risks. The organisation has also warned that upcoming fiscal measures, including changes to national insurance contributions announced in the Budget, could add to retailers' cost burdens and potentially feed through to prices.
For consumers, the easing of shop price inflation offers some relief, though prices are still rising. The data suggests that competition among retailers, particularly in the grocery sector, is helping to limit the extent of price increases. Promotional activity is likely to remain intense in the run-up to the Christmas trading period, as retailers compete for a larger share of household spending.
The Bank of England monitors a range of inflation indicators, including shop prices, as it assesses the broader outlook for consumer price inflation and sets interest rates. While shop price inflation is only one component of the overall inflation picture, its trajectory can provide an early signal of pricing pressures in the goods sector.
Retailers, meanwhile, continue to navigate a challenging environment characterised by weak consumer confidence and changing shopping habits. The shift towards online shopping and the growing importance of convenience have forced traditional retailers to adapt their strategies, often at significant cost.
The BRC-NIQ index is closely watched by economists and industry analysts as a timely indicator of price trends at the retail level. The latest reading suggests that while inflationary pressures persist, they are not accelerating, and retailers are actively managing prices to stimulate demand.
Looking ahead, the outlook for shop prices will depend on a combination of factors, including the path of energy and commodity prices, the strength of consumer demand, and the impact of government policies on business costs. Retailers will be hoping that a stable pricing environment, supported by targeted promotions, can help sustain sales volumes through the crucial final quarter of the year.
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