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Retail prices continue to slide as competition keeps food inflation low

Retail prices continued to slide this month, due to fierce competition among retailers.

Shop prices fell by 1.2% in October, according to the latest BRC-Nielsen Shop Price Index, and prices for non-food items declined by 2.7%.

This follows a 3.2% fall in prices in September compared to the month before.

Helen Dickinson, chief executive of the British Retail Consortium, said: "Once again, it is good news for consumers with shop prices falling in October, albeit at a slower pace compared to the previous month.

"As the retail industry began to see sales bounce back, non-food prices saw the shallowest decline since the start of the pandemic.

"However, given the wider economic context, with stricter restrictions and a possible rise in unemployment, we are likely to see continuing discounts in non-food for months to come.

"Meanwhile, food inflation remained low as supermarkets fiercely competed with one another to offer the best quality goods at the lowest prices."

Fresh food inflation increased from 0.2% to 0.4% in October, while ambient food prices increased by 2.3%, resulting in overall food inflation of 1.2%.

Mike Watkins, head of retailer and business insight at Nielsen, said: "With pandemic restrictions extended, shopping behaviour has been in a holding pattern as households adjust to new ways of working, living and spending.

"To help sales volumes, non food retailers are limiting any price increases coming through the supply chain and food retailers are continuing with the lower prices introduced in recent weeks.

"And should the recession and the growth in unemployment have a further impact on consumer spend, we can expect shop price inflation to remain low for the rest of the year."