UK food prices dip amid supermarkets’ fierce competition, first drop since 2021

The UK has seen its food prices drop for the first time in over two years.

This decline is attributed to the fierce competition between supermarkets as they strive to attract customers.

As per the British Retail Consortium (BRC), food prices saw a minor dip of 0.1pc between August and September.

This marks the first monthly decline since summer 2021.

The most significant reductions were observed in essential items, including dairy, fish, and vegetables.

Throughout the summer, supermarkets have been aggressive in their pricing strategies.

More than 30 rounds of price cuts have been announced, affecting hundreds of products, according to a recent analysis by The Telegraph.

These reductions have not only targeted staple foods like sausages, pasta, and potatoes but also luxury items such as smoked salmon, avocados, and kale.

However, a word of caution: despite the recent decrease, food prices remain 9.9pc higher than they were a year ago.

But this still reflects a significant improvement from August’s 11.5pc year-on-year rise.

Helen Dickinson, OBE, Chief Executive of the BRC, stressed the impact of competition in this landscape.

“Food prices dropped on the previous month due to the fierce competition between retailers. This resulted in year-on-year food inflation dropping to single digits,” she shared.

Furthermore, Helen Dickinson added that while prices have been decreasing, various factors like high interest rates, oil price hikes, global sugar shortages, and disruptions from the Ukraine conflict pose potential risks.

Mike Watkins, Head of Retailer and Business Insight at NielsenIQ, echoed a similar sentiment. He acknowledged the price cuts but highlighted the ongoing economic pressures.

He noted, “With over half of the households still feeling the impact of the increasing cost of living, it’s crucial for retail sales to maintain momentum. This will likely result in more price cuts and promotions across all retail sectors.”

As the festive season approaches, this price war among supermarkets may bring a sigh of relief for many UK shoppers.

However, the lingering economic challenges still cast a shadow on what lies ahead.