(Bloomberg) -- British shoppers enjoyed the first monthly drop in food prices in more than two years as retailers cut the cost of dairy products, fish and vegetables amid “fierce competition” between stores, a survey found.
The 0.1% fall brought annual food inflation back into single digits and contributed to another slowdown in the pace at which the overall price of basic goods is rising, the British Retail Consortium said Tuesday.
Shop-price inflation slowed sharply from 6.9% to a one-year low of 6.2% in September, the BRC said, with families also benefiting from price cuts to back-to-school products, such as uniforms.
The figures add to evidence that the worst cost-of-living crunch in decades is starting to ease as inflation drops below the pace of wage growth. Food, one of the key drivers of price growth over the last year, rose 9.9% compared with September 2022, the slowest pace in 13 months.
Food costs are expected to keep weighing on prices, easing pressure on the Bank of England to restart its interest-rate hiking cycle. Headline inflation has already fallen to its lowest level since the start of the war in Ukraine, which triggered the surge in energy and food prices.
“We expect shop price inflation to continue to fall over the rest of the year,” said BRC Chief Executive Helen Dickinson. “However, there are still many risks to this trend – high interest rates, climbing oil prices, global shortages of sugar, as well as the supply chain disruption from the war in Ukraine.”
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