Supermarket suppliers Associated British Foods PLC (LSE:ABF) and Bakkavor Group PLC (LSE:BAKK) were under pressure in early trading on Tuesday after fresh data revealed that UK shop prices had hit reverse gear for the first time in three years.
The British Retail Consortium figures for August showed an overall decline of 0.3% year-over-year.
However, the numbers also pointed to a marked slowdown in food inflation, both fresh and ambient, leading to a modest sell-off in shares in the two wholesalers, which are also being squeezed by rising wage demands.
BRC chief Helen Dickinson said: "Food inflation eased with fresh food prices, especially fruit, meat and fish, seeing the biggest monthly decrease since December 2020 as supplier input costs lessened.”
Overall, the poor summer led to the discounting of seasonal lines across the high street.
Among the mainline retailers, JD Sports Fashion PLC (LSE:JD.) was the hardest hit as it fell 1.8%, while Next PLC (LSE:NXT) was off less than 1%.
By contrast, the BRC data seemed to have an outsized impact on AB Foods, which dropped 2.8%, and Bakkavor, down 3.2%.
Economists and analysts will be looking at the latest print to assess what impact (if any) it might have on the thinking of the Bank of England's Monetary Policy Committee.
"A September [base rate] cut feels unlikely although on balance the data in aggregate would merit a nudge down whilst any consideration of what the new UK government may do on spending and tax would support a nearer term cut than not," said veteran retail guru Clive Black at Shore Capital.
"As and when any cuts do emerge, we would expect the discretionary end of UK goods demand to benefit, as so the associated stocks. Hey Ho."