Food prices have fallen for a fourth year in a row, as a result of intense competition between supermarkets to gain customers.
The British Retail Consortium have noted the big change, which is fantastic news for consumers, as record-breaking falls continue.
Year on Year Decrease
The BRC-Nielsen Shop Price Index, which looks at shops across the UK, found that grocery shops made during the last month were around 1.8% cheaper than at the same time last year, as prices continue to drop.
“We are now in the fourth year of falling shop prices, so the record-setting run of shop price deflation continues, which is great news for consumers,” says Helen Dickinson, the CEO of the BRC. “This is as a direct result of the intense competition and transformational change in the retail industry, with consumers having access to more choices and greater ability to compare prices than ever before.”
This change of 1.8% is the biggest ever recorded in the food industry, going on from similar drops in previous months: 1.3% in September, and 1.1% in August, with the larger figure representing the overall drop year on year.
Since the Shop Price Index was started, there has only ever been a drop in food prices by more than 1% on one other occasion. This kind of drop is therefore totally unprecedented.
“With a new round price cuts by supermarkets in September and fresh foods also promoted to encourage visits, this has helped maintain deflation in shop prices,” says Mike Watkins, the head of retailer and business insight at Nielsen. “However, the warm and late summer weather was a challenge for many in the non-food channel so we may well see further price discounts as we move into October.”
Non-food items fell by 2.1% in September and 2.5% in August.
A Challenging Economy
Not only is there huge competition between brands, but the recent challenges to the economy have also changed shopping habits for many. Where before there may have been only 3 or 4 supermarket brands fighting for customers, low-budget alternatives such as Lidl, Iceland, and Aldi have picked up steam since the days of the recession made them a more acceptable shopping destination.
Price-comparison apps are also playing their part, with more Brits becoming conscious about how much they are spending and where. Some apps also allow for cashback discounts on certain products which can only be purchased in certain shops, leading shoppers to make more discerning choices about their groceries.
The uncertainty of the Brexit fallout looming ahead will no doubt push consumers to remain conservative, looking for the best deals and shopping based on value rather than proximity or convenience. This will continue to have a knock-on effect on supermarkets, forcing them to keep prices low or lose customers to their rivals.
Food production companies may experience challenges as the situation moves ahead: they will be called upon to shave pennies off their products in order to increase the profit margin that supermarkets can make even while selling at lower prices. This could have serious implications for certain industries where the workforce is already precarious.
If you are looking to escape the effects of this price drop, you can always search for international food jobs. There are plenty of locations where the food industry is booming, and you may not even need to speak a second language. Keep an eye on our job boards to see new opportunities as they arise, and be the first to submit an application. Alternatively, look out for the possibility of new supply chain management opportunities!