Supermarkets could be heading for a Christmas price war (Image: Getty)
In September, the rate stayed at 6.7%, the same as in August, said the Office for National Statistics.
But experts are predicting inflation will drop next month.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: “Inflation is expected to drop sharply when October’s data is announced as a result of falling energy prices.
“This would release some of the pressure that has been squeezing our wallets during this cost-of-living crisis. Though it’s important to say prices aren’t falling, they are just rising at a slower pace than previously.”
Last December, consumer price inflation was 10.5%, when the country was in the thick of the cost-of-living crisis – 36% higher than it is now.
READ MORE: Interest rates rises ‘not enough to fight corrosive’ inflation
As the festive season fast approaches, supermarkets, including budget retailers Aldi, Lidl and Iceland, will be slashing prices to entice Christmas shoppers.
Richard Walker, executive chairman of Iceland Foods, told the Express: “Every retailer aims to do their
very best for their customers at
this special time of year, and the intense competition in our marketplace can only be good news for consumers.
“In any price war, I’m confident Iceland’s unique range and outstanding value will make us a winner.
“This year, we are pulling out all the stops to make 2023 the very best Christmas it can be for every single one of our customers to enjoy with their family and friends.”
Iceland has said it will do “everything in our power to keep prices as low as we can” by offering deals on its party food range, which is popular at Christmas.
The over-60s can benefit from 10% off their shopping every Tuesday.
Tesco has come out fighting, also promising to cut prices.
It has frozen the cost of more than one thousand products – including Christmas dinner staples like cranberry sauce and Jacob’s biscuits for cheese – until January 2024, and has more than 600 products on Aldi Price Match.
Frugal…home dining is more popular (Image: Getty)
Customers told the grocer they are going “all-out” for Christmas, with more than one in 10 saying they plan to spend more time in the kitchen over the festive period.
Almost a third said Christmas food has never been more important, an increase of 16% from last year, after years of families being separated due to Covid restrictions.
Emma Botton, group customer director at Tesco, said: “As the big day approaches, we’re providing customers with all their festive favourites and some exciting twists, with quality and great value at the heart of it all.”
Sainsbury’s has said it is “committed” to offering consumers the “best possible value” and helping everyone “celebrate in style”.
A spokesperson for the supermarket, said: “We continue to invest in keeping prices low – from the everyday items in our Aldi Price Match, and our low price, own brand Stamford Street range, to the hundreds of branded products which are held at competitive prices in our Price Lock campaign.”
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The food retailer said it was focusing on offering deals through its Nectar Prices, with shoppers having saved an extra £400million in the last six months through the scheme.
It is offering three-for-two on health and beauty goods, beers, wines, and spirits – the lowest priced item free, while stocks last. And it will continue to do so over the coming months. While supermarkets are gearing up for a bumper festive season, it has been predicted that many people will opt for a lavish lunch in, rather than heading out to pubs and restaurants, meaning that the hospitality sector may struggle.
Analysts at VoucherCodes.co.uk, said food and drink spending is expected to rise by 5.5% this year.
Overall, the amount spent on Christmas dinner itself is set to go up this year, from £39.79 to £45.44, with many Britons having one big celebration instead of lots of little dos. This is a 14.7% increase from last year. As the UK’s cheapest supermarket, according to consumer champion Which?, Aldi believes it can provide savvy shoppers wondering where to do the big Christmas shop with the “highest quality products at the most affordable prices”.
It has already invested more than £350million in price reductions so far in 2023 across 650 items, with further reductions also expected in the run up to Christmas, the budget supermarket told the Express.
And Morrisons confirmed it too, will have lots of Christmas deals.
But finance expert Ms Morrissey added: “A rapid fall in inflation is by no means certain as it has remained extremely stubborn so far.
“We also need to be mindful of the situation in the Middle East which may keep oil prices high and feed through into high inflation.”
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “Inflation may be dropping but prices are still rising, albeit at a slower rate than we’ve had.
“The Bank of England is highly likely to keep interest rates on hold in November, which will come with another sigh of relief for borrowers.
“But they are set to remain at a painfully high level for many months.
“So, our increasingly frugal habits look set to bed in this Christmas as more people are forecast to entertain at home and escape the mounting cost of eating out.”
Inflation has fallen significantly from its high of 11.1% last October, says Anna Leach CBI Deputy Chief Economist
Over the last few months we’ve seen a lot of movement on inflation – an issue that’s been front of mind for businesses and consumers.
Inflation has fallen significantly from its high of 11.1% last October to 6.7% in September.
Last year’s mild winter helped to bring down gas prices.
Oil also came down earlier this year, alongside food price inflation. In April, food prices were up almost 20% on the year before – the highest increase in 40 years.
This followed the impact that the Ukraine war had on food commodities, fertiliser and animal feed. As we head towards the festive spending season, there is more good news.
Inflation is expected to continue heading down as energy, food and goods continues to track down – with food inflation already almost half its rate in the spring at just over 12%. But services such as holidays, communication and housing services, are expected to continue to rise at a fairly steady pace in the coming months.
But it does mean we’re less likely to see another rise in interest rates on Thursday, which will be a great relief for households who’ve been at the receiving end of the sharpest drop in incomes since the 1950s.
It’s been a slow start to the autumn for retailers so far as a mild autumn has hit sales of warmer clothing in particular. The CBI’s retail survey for October shows half of retailers report sales are down compared to the same time last year.
Meanwhile the latest consumer confidence data fell, reflecting a deterioration in perception of the economic outlook, the climate for major purchases and their personal finances.
So, while it’s good news prices aren’t rising at the pace they were, consumers are still feeling the pinch.
