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According to the British Retail Consortium, prices in British shops experienced the sharpest decline in over three years in September, signaling a reduction in inflationary pressures on consumers. Annual shop price deflation reached 0.6% in the 12 months leading up to September, marking its weakest level since August 2021. This downward trend in price growth has been observed in seven out of the past nine months. Non-food deflation also decreased to 2.1% from 1.5% in August.

Helen Dickinson, the head of the BRC, expressed that while the easing price Inflation is positive for consumers, factors like geopolitical tensions, climate change, and regulatory costs could potentially reverse this trend. On the other hand, food price Inflation rose to 2.3% from 2.0%, partly due to poor harvests impacting key farming areas and leading to higher prices for cooking oil and sugar.

Official data showed that consumer price Inflation remained at 2.2% for the second consecutive month in August, well below the peak of 11.1% in October 2022. Despite this, services Inflation, a key indicator of underlying Inflation pressure, inched up. The Bank of England is expected to reduce borrowing costs in November after keeping its key interest rate at 5% in September.

Megan Green, a BoE policymaker, recently highlighted the risk of weak consumer demand rebounding more than anticipated by the Central bank. Surveys indicate that many households are exercising caution due to potential tax increases in the upcoming budget announced by finance minister Rachel Reeves.

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