Shop price inflation in the United Kingdom slowed to 1.4 percent in September, a decline attributed largely to competitive discounting among retailers, according to the British Retail Consortium (BRC). The group’s monthly index, which tracks prices paid by consumers in shops, showed a 0.1 percent decrease compared with the previous month, even as energy costs continued to rise.

Food price inflation eased slightly from 2.7 percent in August to 2.5 percent in September, contrary to expectations that tensions stemming from the ongoing US-Iran conflict and the effective closure of the Strait of Hormuz would push prices higher. Inflation in non-food retail items also decelerated, dropping from 1.0 percent to 0.8 percent during the same period. Traditionally, inflation in non-food categories tends to remain lower than that for food.

Helen Dickinson, chief executive of the BRC, noted that competition among retailers helped moderate inflationary pressures, allowing consumers to benefit from better value in shops. She emphasized that food inflation had edged down as retailers continued to absorb some of the costs.

Despite these trends in shop prices, broader consumer price inflation remained elevated, with average inflation across the UK economy reaching 3.1 percent in the year to August. The Bank of England has reported that, although oil prices have risen above $100 a barrel following geopolitical uncertainties, including the US-Iran tensions, these have yet to translate into second-round inflationary effects such as wage increases or widespread price rises in other sectors. The Bank’s target for medium-term inflation remains at 2 percent, a benchmark it has not met since 2021.

Data from the Office for National Statistics indicated that inflation for food and non-alcoholic drinks was running at 1.3 percent as of August. Food price inflation was a significant driver of cost-of-living pressures in 2022, at one point surging as high as 19 percent following Russia’s invasion of Ukraine.

Looking ahead, Mike Watkins of NielsenIQ, which contributes to the BRC’s survey compilation, anticipated that the final quarter of the year would likely see consumers tightening household budgets. This outlook suggests that retailers may continue to absorb higher costs to remain competitive and support shoppers during this period.