Price growth in UK shops ticked down to 1.4% in the 12 months to September from 1.5% in August, according to the British Retail Consortium's survey conducted by NIQ. The cooler print reflects what many shoppers have noticed lately: more promotions and reductions as stores work to keep people buying rather than pass through every cost increase.
Food inflation eased to 2.5% in September from 2.8% the month before. Increased competition among retailers helped cap grocery price rises, even as higher global energy prices and weak harvests across Europe put upward pressure on costs.
"Sales growth slowed after the hot summer," said Mike Watkins from NIQ, which conducts the survey. The fourth quarter "is expected to bring tighter household budgeting so retailers will still need to absorb cost increases wherever possible," he added.
The results give Bank of England officials some reassurance that, so far, the Iran price shock hasn't spread widely across the UK economy. Policymakers warn that the chances of a rate hike rise the longer the war drags on, after holding rates steady from the war's outset.
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A slower rise in shop prices means your weekly basket could sting a little less, especially on food. Still, how this plays out depends on retailers keeping the pressure on with deals while global cost headwinds do not worsen. If the conflict drags on and the BOE turns more hawkish, borrowing costs could move higher into year end, which would reshape household budgets.
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