A new survey shows that food prices have dropped for the first two years, amid fierce competition between supermarkets.
According to the British Retail Consortium’s and NielsenIQ’s latest Shop Prices Index, the monthly grocery inflation rate dropped to -0.1% in September from 0.6% in August.
The main reason for the decrease in food inflation was attributed to the competition between supermarkets. The research also found that lower costs of raw materials are being passed onto shoppers.
The annual increase in grocery prices was 9.9 percent, the lowest rate of growth since August 20,22. The August figure was 11,5%. The overall inflation of retail prices dropped from 6.9% to just 6.2 percent.
Helen Dickinson said that the food prices fell compared to the previous month due to fierce competition among retailers. This led the headline rate to fall for the fifth consecutive month, helped by the easing of cost pressures.
The Competition and Markets Authority investigated retailers this year over allegations that they overcharged consumers in order to increase their profit margins. This process is known as ” Greedflation”. The watchdog found that they unfairly increased petrol prices by 5p per litre. However, the lack of competition did not contribute to this increase.
In the last decade, German discount supermarkets Aldi, Lidl and Spar have eaten away at the market share of the big British supermarkets, forcing them to adopt more aggressive pricing strategies. Inflation has been sky-high over the last two years, which has led families to shop at lower-cost retailers.
According to the NielsenIQ index and retail consortium, official inflation rates for food from the Office for National Statistics are also expected to be lower. In August, food prices rose 14.8% annually, keeping headline inflation at 6.7%, but it was still the highest level in 18-months.
Rishi Sunak is pleased to hear that food inflation has declined in September, as he prepares for his speech at the Conservative Party Conference in Manchester.
In revised estimates last week, the ONS said that the economy is now 1.8% larger than before the pandemic. Only a few weeks ago, the gross domestic product (GDP) was estimated to be 0.2 percent lower. This made Britain the worst performing nation in the G7 group since the outbreak of the coronavirus.
Since the end of 2019, the UK’s growth rate has been faster than that of Germany and France.
The Bank of England will also be notified by a decrease in the inflation of food prices to hold interest rates. For the first time in November 2021, the central bank did not change interest rates last month. In August, core inflation (which excludes volatile energy and food prices) fell to 6.2%.