UK shop prices continued to slide in October, marking the fifth consecutive month of decline as retailers hoped to reverse weak sales with greater discounts.
Shop price deflation decelerated to 0.4% compared to 0.6% in September, data from the BRC-Nielsen shop price index covering the period between 1 and 7 October showed.
“With an uncertain economic outlook at the start of the ‘golden quarter’, the industry has been working hard to stimulate demand and to keep price increases as low as possible,” Mike Watkins, head of retailer and business insight at Nielsen, said.
“Seasonal ranges are now in store, and we can expect an increase in promotional activity in the run-up to Christmas, which will give shoppers further savings at the checkout.”
Food inflation accelerated to 1.6% in October from a 17-month low rate of 1.1% the prior month.
The rate of fresh food inflation accelerated slightly to 0.8% from 0.7%, below the 12 and six-month average increases of 1.3% and 1.2% respectively.
Ambient food inflation, however, spiked to 2.7% from 1.7% in September, above average.
Non-food prices have fallen 1.5%, “well below the 12-month average” said BRC CEO Helen Dickinson.
“The year has seen relatively weak sales and retailers hope that Black Friday and Christmas will reverse this trend with the help of lower prices,” she added.
“Rising global food prices and the higher oil prices from earlier this year will increase costs for retailers. These factors come as the industry struggles with the burden of public policy costs, such as business rates, which is weighing heavily on the industry and keeping margins at record lows.”
Dickinson urged the government to remove the “threat of a no-deal Brexit” which, despite having been pushed back following Monday’s extension agreement from the EU, “has not gone away”.
“The government must secure an agreement with the EU as soon as possible to give consumers and retailers the certainty they need,” she concluded.
Sainsbury’s (SBRY) has announced that non-executive directors Matt Brittin and Jean Tomlin will step down from the supermarket’s board next year.
Brittin, the boss of Google’s operations in Europe, will leave after nine years on the board in line with “good corporate givernance”, Sainsbury’s said, while former Marks & Spencer executive Tomlin will step down after seven years for “personal reasons”.
Sainsbury’s has already kicked-off the search for replacement to fill both positions and will make further announcements in ”due course”.
Sainsbury’s shares were trading down 0.9% at 209p.
Cadbury-owner Mondelez International (MDLZ) has raised its 2019 outlook as sales in the third quarter were boosted by surging demand in emerging markets.
Net revenues rose 1.1% to $6.36bn in the three-month period, while on an organic basis sales were up 4.2%.
So far in 2019, net revenues are down 1.1% to $18.96bn but are up 4.2% on an organic basis.
Gross profits increased 4.2% to $2.52bn in the three-month period, however, profits are down 2.9% to $7.6bn since the beginning of the year.
After a “strong” performance, Mondelez said it expected organic net revenues to rise 3.5% or more in the full-year. Previous expectations were set at 3% growth.
“We are pleased to report another quarter of strong top-line growth, continuing the momentum of the first half, enabling us to further increase our outlook for the year,” chairman and CEO Dirk Van de Put said.
“Our strategy to accelerate growth by focusing on the consumer, driving operational excellence and unlocking the potential of our local business units is delivering good results from both local and global brands.”
On the markets this morning the FTSE 100 opened 0.2% lower at 7,291.94pts.
Yesterday in the City
The FTSE 100 closed down 0.3% at 7,306.26pts as MPs discussed Boris Johnson’s call for a general election to take place on 12 December.
Closing in the red, Fevertree Drinks (FEVR) dropped 2.9% to 1,986.50p, Greggs (GRG) fell 1.9% to 1,779p, Bakkavor (BAKK) was down 2% to 120p, Nichols (NICL) closed 3% lower at 1,540p and Mcbride (MCB) dropped 4.1% to 45.80p.