UK shop prices fall the most since August 2021, the By Reuters survey shows

LONDON (Reuters) – British shop prices fell at their fastest pace in three years in September, the British Retail Consortium said on Tuesday, adding to signs that inflationary pressure on consumers has eased.

Annual shop price deflation fell to 0.6% in the 12 months to September, the BRC said, the weakest since August 2021 and slower than the 0.3% fall in the previous month.

It was the seventh time in nine months that the pace of price growth weakened.

Non-food deflation eased to 2.1%, down from a 1.5% drop in August.

“Easing price inflation will certainly be welcomed by consumers, but continued geopolitical tensions, climate change and government-imposed regulatory costs could reverse this trend,” BRC chief Helen Dickinson said.

Food price inflation rose to 2.3 percent from 2.0 percent, a rise that Dickinson attributed in part to poor harvests in key agricultural areas, which led to higher prices for cooking oil and sugar.

Official figures show consumer price inflation held at 2.2% for the second consecutive month in August, well below the 41-year high of 11.1% in October 2022.

But services inflation, a closely watched indicator of underlying inflationary pressure by the Bank of England, rose.

The central bank is expected to cut borrowing costs in November after keeping its key interest rate at 5% in September.

BoE policymaker Megan Green said last month she saw a risk that weak consumer demand would rebound by more than the central bank anticipated.

Consumer surveys have shown many households remain wary of potential tax rises in Finance Minister Rachel Reeve’s first annual budget later this month.