Better inflation news in UK as food retailers expect prices to fall

UK retail prices are rising at their slowest in more than a year as retail price inflation fell from 4.7% to 4.4%. A big contributor to the slowdown is the rapid cooling of food prices. Food inflation fell from 11.5% in August to 9.9% in September according to the British Retail Consortium. Despite inflationary pressure from high oil prices and higher borrowing costs, retailers expect inflation to continue to slow this year.

Tesco has upgraded its forecast for annual profits after a very strong first six months of the year. The company has raised its full-year profits guidance to £2.6bn to £2.7bn, up from £2.5bn last year, as sales increased 13%. The company says it is attracting higher-end and budget shoppers by being slower to pass on cost increases to customers. The company says food inflation is expected to keep falling. Greggs has also reported that cost pressures from higher raw materials and energy are beginning to ease as it released an upbeat quarterly update which showed sales up 14%..

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