Higher shop prices are likely in the run-up to Christmas, says BRC-NielsenIQ, which reports that annual shop price deflation eased to -0.4% in October compared to September’s decrease of -0.5%, the slowest rate of decline since January 2020.

Non-Food deflation was steady at -1.0% in October.

BRC chief executive Helen Dickinson OBE says: “While overall prices remain below their October 2020 levels, this is the third consecutive month of both food and non-food MoM rises. October food prices saw the highest rate of YoY inflation since November 2020, with fresh food prices rising for the first time in 10 months. Meanwhile, in non-food, ongoing global shortages of materials and supply issues with logistics and shipping continue to put upward cost pressures on products such as furniture. It is now clear that the increased costs from labour shortages, supply chain issues and rising commodity prices have started filtering through to the consumer.

“Tight margins mean retailers may not be able to absorb all of these new costs, so prices will continue to rise. A BRC survey showed three in five retailers expect prices to increase in the run-up to Christmas, and the ongoing labour shortages are making the situation worse. Retailers continue to do all they can to ensure value for money for customers and are looking to work with Government to find a long-term solution to these shortages – otherwise it is the British consumer, who already faces higher energy bills this winter, who will suffer the consequences.”

Mike Watkins, head of retailer and business insight, NielsenIQ, adds: “With food prices slowly increasing we can expect shoppers to start to rebalance basket spend over the next few weeks, particularly with increased concerns about discretionary spend. And with consumer sentiment now more cautious we cannot ignore that availability issues are still top of mind. So consumers will be uncertain about when and where to spend, and with Christmas promotions about to kick in, competition will intensify in both food and non-food retailing."