Food prices drop ahead of supermarkets' pre-Christmas battle - Nielsen and BRC

Kasmira Jefford
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Discount chains like Lidl have been putting pressure on other supermarkets (Source: Getty)
Food prices fell back into deflation in September, industry figures released today show, as the supermarkets prepare to battle it out for customer’s wallets in the run-up to Christmas.
Nielsen and the British Retail Consortium (BRC)’s latest monthly index said food saw annual deflation for the first time in three months, falling sharply to 0.5 per cent from a 0.2 per cent rise in August.
This was led by a 1.5 per cent decline in fresh food prices, which compared with a 0.5 per cent fall in August, with products such as meat and fish recording the biggest declines.
Non-food prices also fell faster than the previous month, reporting a drop of 2.9 per cent from 2.4 per cent in August, as retailers discounted heavily on products such as electricals and home entertainment.
Overall shop prices fell by 1.9 per cent year-on-year in September as a result, down from a 1.4 per cent decline the previous month.
Mike Watkins, head of retailer and business insight at Nielsen, said the drop in prices was “good news” for shoppers, while also encouraging them to spend more over the crucial Christmas period.
“Within food retailing, there is still downward pressure on prices and this is expected to continue as supermarkets battle for the wallets of the Christmas shopper, whilst on the high street, many non-food retailers are using strong, seasonal promotions to drive sales growth,” Watkins said.
BRC’s director general Helen Dickinson said: “While consumer confidence slowed slightly the fortuitous mix of near flat inflation and falling prices in both food and non-food will help to maintain retailers confidence for the foreseeable future.”
Britain’s big four supermarkets are under pressure to revive sales and win back shoppers defecting to Aldi and Lidl. The two German discounters have also waded into the fight for Christmas shoppers in recent years by expanding their festive range.
Recent data from Nielsen shows that nearly 50 per cent of UK households buying groceries are visiting the two bargain retailers every month.

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