UK shops cut prices; food inflation hits 8-year low

Prices in U.K. high street stores fell at a faster rate in September and food inflation hit an all-time low, as supermarkets tried to attract customers with promotions and special offers, new figures showed.

Food prices grew by just 0.3 percent last month, compared with September 2013, matching levels last recorded in December 2006, according to the latest data from British Retail Consortium (BRC) and Nielsen. Over one-third of all groceries were on promotion or special offer,

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Customers inside an Asda supermarket in London.
Simon Dawson I Bloomberg via Getty Images

Overall, shop prices fell for a 17th consecutive month, declining 1.8 percent in September, compared with a1.6 percent fall in August.

"The 17th consecutive month of deflation is good news for hard-pressed households. Retailers are turning their attention to Christmas by reading current conditions and matching consumer sentiment well with their promotions and offers," BRC Director-General Helen Dickinson said in a news release/report?.

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Fresh food prices remained flat, for the first time since February 2010, which Dickinson said would help those struggling despite the economic upturn.

"Consumers can take heart that the outlook for inflation remains modest. Falling commodity prices, the strengthening of sterling, benign pressure in the supply chain and, critically, fierce competition across the retail industry suggests lower shop prices for consumers will continue," she added.

Non-food prices fell significantly, mainly fueled by "great bargains" in furniture, flooring and electricals—even as increased activity in the housing market supported robust sales.

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Head of retailer and business insight at Nielsen, Mike Watkins said sales patterns were difficult to predict following an unusually warm late summer, but shoppers could anticipate a "continuation of the current low levels inflation and even deflation for the rest of the year."