Prices tumble at UK’s stores

 
Julian Harris
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PRICE wars between supermarkets are driving down the cost of food and other items, as stores fight for the attention of increasingly squeezed shoppers.

Food was half a per cent cheaper last month than in September, the British Retail Consortium (BRC) revealed this morning.

Tesco has been pushing its “Big Price Drop”, while Asda’s “Price Guarantee”, Sainsbury’s “Brand Match” and Morrisons’ “Price Crunch” are all marketing aggressive discounts.

Yet the squeeze on consumers is so tight that budget stores are benefiting the most, according to separate research from Kantar Worldpanel.

Aldi grew 18.8 per cent in the 12 weeks to the end of October, compared to the same time last year. Iceland was up 11.6 per cent and Lidl 8.9 per cent, the figures showed.

Heavy discounting promotions at larger supermarkets are largely cancelling each other out, according to Kantar.

“Performances from the big four show only marginal differences this period, with no outright winner,” said Kantar’s director Edward Garner.

Asda (5.1 per cent) and Morrisons (5.5 per cent) narrowly exceeded growth of 4.6 per cent in the whole grocery market, while Tesco and Sainsbury’s both lagged a little behind, with takings up 4.1 per cent.

Falling food prices pulled overall shop prices down by 0.3 per cent from September to October, the BRC said this morning.

Shop price inflation compared to the same time the previous year came in at 2.1 per cent last month -- its lowest rate since last December.

The official consumer price index (CPI) measure of inflation hit 5.2 per cent in September. “It’s clear inflation is not coming from shops,” commented the BRC director general Stephen Robertson. “Rising utility, fuel and insurance bills are the big pressures on household budgets.”

Mike Watkins of researchers Nielsen, which helped to compile the data, said: “Christmas shopping is now underway and shoppers are having to make their spending money go further this year, so it’s encouraging to see shop price inflation falling this month.

“Retailers in general are offering more discounts than last year and food retailers in particular are looking to encourage loyalty of shoppers over the next eight weeks.”

Non-food prices also fell from September to October, down 0.1 per cent. Annualised inflation of non-food items sold in shops tumbled to 0.8 per cent in October, compared to 1.3 per cent the previous month.