Overview

• The UK's shop price inflation has dropped to a 14-month low at 5.2% in October, down from 6.2% the previous month, largely driven by supermarkets like Tesco and Sainsbury's reducing prices to compete with discount chains Aldi and Lidl.
• Food price growth fell from 9.9% to 8.8%, primarily owing to reductions in domestic fruit prices, with fresh food inflation reaching its lowest point since July 2022.
• However, retailers warn that their ability to control future price rises may be limited in light of rising business rates and a forthcoming increase in the business rates tax, with advisory group Altus predicting gross business rates in England will rise by £2 billion in April next year.
• Retailers, along with pubs, hospitality, and leisure businesses are facing steep increases in tax bills next year, with the BRC warning that without government intervention, an additional £470m per year would be added to retailers' business rates, potentially increasing consumer prices.
• While inflation measures appear to be easing across a range of goods, high costs for imported goods driven by a weaker pound, high production costs and emerging trade frictions remain a challenge, leading to an uneven inflation landscape across different product categories.