Shoppers continue to enjoy falling prices as retailers try to encourage more into stores and recover lost ground due to the Covid-19 restrictions on social distancing, according to the British Retail Consortium (BRC).
The BRC-Nielsen shop price index revealed prices fell in September by 1.6% compared with August. They had fallen by the same amount the month previously.
Non-food goods fell 3.2% in September compared with a 3.4% drop in August, but it was offset by a 1.2% rise in food prices.
The BRC said it was another good month for consumers, but warned a no-deal Brexit could cause issues as new tariffs in January could lead to supermarkets footing a bill of £3.1 billion a year.
Chief executive Helen Dickinson said: “Without a zero-tariff deal with the EU, supermarkets will be subjected to £3.1 billion a year of tariffs on food and drink, which they will have little choice but to pass on to their customers as retail margins are so thin.
“Many non-food retailers will also face large tariff bills, and as a result, the total cost to the industry and its customers would be much higher.
“The Government must prioritise a tariff-free deal, otherwise hard-pressed consumers will bear the brunt of price increases.”
The September price fall of 1.6% is below the 12-month average price decrease of 1.1%, but above the 6-month average price decrease of 1.7%.
Non-Food prices fell by 3.2% in September compared to a decline of 3.4% in August. This is below the 12-month average price decline of 2.6%, but above the 6-month average price decline of 3.5%.
Food inflation eased to 1.2% in September, down from 1.3% in August. This is below the 12 and 6-month average price increases of 1.4% and 1.4%, respectively.
Fresh Food inflation held at 0.2% in September. This is below the 12 and 6-month average price increases of 0.6% and 0.5%, respectively. This is the lowest rate of increase since February 2017.
Ambient Food inflation slowed to 2.5% in September, down from 2.8% in August. This is below the 12 and 6-month average price increases of 2.6% and 2.7%, respectively.
Mike Watkins, head of retailer and business insight at Nielsen, said the next rent payments will be a good indicator for which retailers are likely to survive the Winter.
He said: “Food shop price inflation has slowed with supermarkets introducing new price cuts this month and non-food retailers had the additional challenge of selling through seasonal stock, disrupted by unpredictable weather.”