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Food prices have fallen for the first time in two years in September to keep the overall UK rate of inflation steady at 6.7%.
Milk, cheese and egg prices all decreased in the month, with cheese showing the biggest drop at 3.3% between August and September. Mineral water, soft drinks and juices also helped ease the rate of food inflation, while fish and frozen prawns continued to rise.
It meant food and non-alcoholic drinks prices fell 0.1% between August and September, compared with a 1.1% rise in the same period a year ago.
This resulted in an easing in the annual rate in the category to 12.2% in September, down from 13.6% in August and the recent high of 19.2% in March 2023, which was the highest annual rate seen for more than 45 years.
Helen Dickinson, CEO of the British Retail Consortium, said the fall in retail rates reflected the the fierce competition between retailers, their investment in cutting costs and the fall in the price of some global commodities.
“These factors helped shoppers welcome the first fall in food prices in two years, as September prices dropped below those in August,” she added. “Some of the biggest price cuts were seen on items such as cheese, margarine, pasta and chocolate. This will be particularly welcome at a time when households face rising heating costs as winter sets in.
“With the all-important Christmas period fast approaching, retailers hope that cost pressures continue to ease in the coming months.”
FDF CEO Karen Betts said it was good to see see food and drink inflation fall for the sixth consecutive month.
“Energy is embedded in everything food and drink businesses do, and so recent lower energy costs are welcome, which have driven down logistics costs too.
“However, other costs remain stubbornly high and these have been exacerbated by wildfires, heatwaves and flooding across parts of Europe this summer. This has reduced fresh produce yields and driven up prices for sugar and olive oil in particular. Unpredictable weather elsewhere in the world is also impacting commodity prices, such as cocoa, and the new Black Sea corridors used by Ukraine for shipping grain are proving significantly more expensive than when the Black Sea Grain Deal was in place, which risks pushing up grain prices again.”
However, alcoholic beverages and tobacco saw the annual rate increase from 10.5% last month to 11.2% in September.
And rising fuel prices also partially offset the declines elsewhere as petrol rose 5.1% between August and September.
ONS chief economist Grant Fitzner said: “After last month’s fall, annual inflation was unchanged in September. Food and non-alcoholic drinks prices eased again across a range of items with the cost of household appliances and airfares also falling this month.”
Morning update
Just Eat Takeaway Q3 update
Just Eat Takeaway has lifted its profit forecast for the year and launched a €150m share buyback programme as the delivery service returned to growth in the UK and Ireland.
Total gross transaction value (GTV) fell 7% in the third quarter to €6.5bn as an 18% decline in North America and a 17% drop in Southern Europe overshadowed 6% growth in Northern Europe and a 4% uplift in the UK and Ireland.
Orders all four regions declined year-on-year, with total orders for the quarter down 7%.
Just Eat revised its constant currency GTV forecast to be about -4% for the year, which is the bottom end of its previous range of -4% to +2%.
Management upgraded adjusted EBITDA guidance to €310m, up from €275m.
CEO Jiste Groen said: “The majority of our business has returned to GTV growth in the third quarter with particular strong momentum in Northern Europe and the UK and Ireland segments.
“Within the UK and Ireland we continue to invest significantly whilst at the same time increasing profitability. Although the recovery of North America is on a slower trajectory, we are satisfied that this segment too is rapidly becoming cashflow neutral.
“As a result, we are in a position to upgrade both our Adjusted EBITDA and cashflow guidance and now expect to be approximately cashflow break-even in the second half of 2023 and positive thereafter.”
Cake Box first-half update
Dessert shop chain Cake Box has reported a recovery in sales and margins as raw material and input prices stablised.
Trading in the six months to 30 September has been in line with the board’s expectations, with revenues forecast to be up by about 6% year on year and adjusted profits to be ahead of the first half a year ago.
The group said in the update that the performance reflected continued strong like-for-like franchise store sales growth and further new store openings.
CEO Sukh Chamdal added: “We enter the second half of the year with good momentum and remain confident in our growth prospects following the investment in our operations and our enlarged and enhanced operational team.”
Morning shares
The FTSE 100 is down 0.3% to 7,655.93pts this morning as inflation remaining stubbornly flat.
Just Eat Takeaway soared 7.8% higher on the profits upgrade, while Cake Box edged up 0.4% to 145.6p.
Other early risers included Glanbia, up 4.3% to €15.33, THG, up 1.3% to 70.7p, and M&S, up 1.2% to 224.9p.
Hilton Food Group, Hotel Chocolat and Greencore are down 2.8% to 653p, 1.4% to 140p and 0.9% to 91.2p respectively.
Yesterday in the City
The FTSE 100 ended the day up 0.6% to 7,675.21pts.
Embattled THG had a good day as markets reacted positively to a bullish Q3 trading update as the online group slowed the rate of its revenue decline. The shares shot up 5.2% to 70.3p.
Losers yesterday included Virgin Wines UK, Just Eat Takeaway and Finsbury Food Group, falling 7% to 40p, 2% to 1,039p and 1.8% to 107p.
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