---
title: "August 2026: cheaper food, no happier shopper"
description: August broke the link between falling prices and rising demand. Food inflation is down to 1.7% and shoppers are no happier. What it means for your Q4 plan.
image: https://matthewgauntassociates.co.uk/hubfs/august-2026-cover-1200x1200.jpg
---

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# August 2026: cheaper food, no happier shopper

- September 14, 2026

![Matthew Gaunt](https://matthewgauntassociates.co.uk/hubfs/Matthew%20Gaunt%20-%20blog%20author%20avatar%20400px.jpg)

[Matthew Gaunt](https://matthewgauntassociates.co.uk/blog/author/matthew-gaunt)

Monthly Newsletter · August 2026

## Cheaper food. No happier shopper.

For two years boards were told the same thing: get inflation down and the shopper comes back. Food inflation is now 1.7%. The shopper has not come back. That gap is the most useful thing on your desk this quarter.

Matthew Gaunt  |  September 2026  |  Board Advisory

Five themes from August. Two of them are practical AI you can put to work by Monday. The other three cover where your money and your liability actually sit this quarter.

1

Artificial intelligence · new capability

## The recording you already pay for

In August, Google released [Gemini 3.5 Transcribe](https://blog.google/innovation-and-ai/technology/google-ai-updates-august-2026/), a speech-to-text model built for live captioning, voice agents and post-call analytics. Google has not published a price for it. The direction across the rest of its range is down: in the same announcement, Gemini 3.7 Flash launched at half the cost per million tokens of the model it replaced.

Every consumer business of scale records its calls. Most read a sample of a few dozen a month for quality scoring. The rest sits on a server as a cost, not an asset.

Those recordings are the only place your customers tell you, in their own words and unprompted, what is wrong. No survey gets close. My read is that the cost of reading all of them, rather than a sample, has now fallen far enough to be worth testing this quarter. Test it on one month before you budget for a year.

The so-what for your board

Pull one month of calls from your busiest queue and transcribe all of them, not a sample. Ask one question of the transcripts: what are the five reasons customers call that a better website or a clearer policy would have removed? Put a number on each, calls per month times handling cost. You cut demand out of the contact centre rather than cutting heads in it. The operators who read all their calls this autumn enter 2027 knowing something their competitors are still guessing at.

2

Artificial intelligence · prompt of the month

## Split price from volume in your own numbers

Most board packs report sales growth as one number. That number hides the only question that matters: did we sell more, or did we charge more?

This month makes the point. [Kantar has take-home grocery sales up 3% in the four weeks to 1 September, on grocery price inflation of 1.7%](https://meatmanagement.com/news/kantar-finds-grocery-sales-up-3-over-august/84042.article). Take one from the other and volume growth is around 1.3%. Real, but a long way short of the 3% headline, and that gap is the part most board packs never separate. If yours does not, you are reading a price story as a demand story.

Copy this prompt

Here is my sales export by product and by month for the last 24 months, with units and value.

For every category, split the year-on-year value change into two parts: the part explained by price per unit, and the part explained by units sold.

Show me a table with category, value growth %, price effect %, volume effect %, ranked by volume effect from worst to best.

Then tell me, in plain English, which three categories are growing on price alone and would shrink if I stopped putting prices up.

The so-what for your board

Run it before your next board meeting. The output is one table and three sentences, and it will change at least one conversation in the room. You stop pricing your way through categories customers have quietly stopped buying, and you find the volume decline while you can still fix it. Every board deserves to know which half of its growth is real.

3

Growth · demand

## The confidence gap

Grocery price inflation fell to 1.7% in the four weeks to 1 September. Kantar's Fraser McKevitt put it plainly: shoppers' financial confidence has not risen with it.

[Total retail sales grew 0.7% in August](https://www.retailgazette.co.uk/blog/2026/09/uk-retail-sales-growth-slows-to-four-month-low-as-shoppers-rein-in-spending/), a four-month low against a 12-month average of 1.6%. Non-food fell 0.8%. [Footfall dropped 1.7%, and the high street lost 3.1%](https://retailrewired.co.uk/2026/09/08/brc-kpmg-consumer-demand-cools-as-summer-ends-prompting-subdued-retail-sales-in-august/).

Be careful with one month. August carries a holiday distortion, a weather effect and a comparative base, and any of those could explain a soft print on its own. What makes this one worth your attention is that it points the same way as the Kantar volume read, from a different panel. Two sources, one direction.

Tesco took share over the same period, up 0.6 points to 27.8%. One month and one retailer is not a trend, but it is consistent with share moving to scale rather than being created by the market.

"Falling prices are not buying you the volume they used to. That is worth knowing before you sign off a Q4 plan built on recovery."

The so-what for your board

Re-forecast Q4 on flat volume and let price do nothing for you. If the plan still works, sign it. Look at where customers now shop rather than what they now pay: high street footfall fell twice as fast as total footfall, so your location mix matters more than your price file. Name the two categories where you have taken price twice in twelve months, and hold the third rise. And put the September print in the diary, because one month is a signal and two is a trend.

4

Cost · energy

## Two energy bills in one week

On 26 August, [Ofgem confirmed the energy price cap rises 4% to £1,723 a year from 1 October](https://www.ofgem.gov.uk/press-release/energy-price-cap-will-rise-4-october-2026). Gas bills rise 8%. Around 11 million households, roughly 35%, sit on fixed tariffs and will not feel it.

The number under-reported everywhere is why the rise was only 4%. The Government removed VAT from domestic electricity bills, and Ofgem puts the effect at around £45 a year. Without it, the typical household would be looking at roughly £1,768. Ofgem's Neil Kenward pointed at high international gas prices as the underlying driver.

That matters twice. Your customer's Q4 budget takes a rise on the day the golden quarter starts. Your own non-domestic energy contracts have no cap at all.

The so-what for your board

Check when your own energy contracts renew, because the cap protects households and not you. If a renewal falls in the next six months, get quotes now rather than in December. Build the Q4 promotional calendar around the first two weeks of October, when the rise lands and attention to price peaks. And stop planning against an average customer: model the fixed-tariff third separately, because their Q4 looks nothing like the other two thirds. A tax cut is holding this number down. Plan for the year when it is not.

5

Policy · employment

## Two October dates that change who you are liable for

From 1 October, section 48 of the Border Security, Asylum and Immigration Act 2025 [extends right-to-work checks well beyond employees](https://accessfinancial.com/uk-illegal-working-regime-right-to-work-checks-october-2026/). Workers, individual sub-contractors and gig or platform workers all come into scope, including down subcontracting chains. It applies to engagements starting on or after 1 October. Civil penalties run to up to £45,000 per worker for a first breach and up to £60,000 for a repeat. The [exposure is sharpest in hospitality staffing models](https://www.freeths.co.uk/insights-events/legal-articles/2026/new-right-to-work-rules-put-hospitality-staffing-models-under-the-spotlight/).

From 30 October, the Employment Rights Act duty to take all reasonable steps to prevent sexual harassment takes effect, and third-party harassment liability extends to all protected characteristics.

A third change is easy to overstate, so be precise about it. From 1 October, [tribunal time limits double from three months to six](https://www.pinsentmasons.com/out-law/guides/employment-rights-bill-timeline-2026-beyond), but only for named claim types: breach of contract damages, part-time worker and fixed-term employee claims, and Information and Consultation Regulations breaches. A wider extension to other claims is widely expected but has not been confirmed. Plan for it, do not brief your board as though it has happened.

The right-to-work penalty is the one to focus on, because it is per worker. In a business that uses agency labour at peak, that arithmetic gets uncomfortable quickly. Q4 is exactly when the agency headcount arrives.

The so-what for your board

List every category of person who does work for you and is not on payroll: agency, contractors, platform, subcontractors' staff on your sites. Ask each labour supplier in writing who performs the right-to-work check, and to see the evidence, before your peak intake starts on 1 October. Book the harassment training and update the policy now, because the 30 October duty is judged on the steps you took beforehand. Take your own legal advice on scope before you act. Do this in September and October is a trading month, not a compliance one.

The Bottom Line

## Plan for the market you have, not the one you were promised

Falling prices are not buying the volume they used to. Food inflation is 1.7% and the shopper is no happier. Retail sales grew 0.7%. Behind the grocery headline, volume growth is running at around a point, not three.

So the board question for Q4 is not how much the market will recover. It is what your plan looks like if it does not.

Three moves for September. Re-forecast on flat volume and see if the plan still stands. Get your labour supply chain right before 1 October, when the per-worker penalties widen. Read every call your contact centre records this month, not a sample, and find the five reasons customers had to phone you at all.

None of this needs the market to improve. All of it works better if it does.

You are where you are. The opportunity is to make the next ninety days clearer than the last.

→

### Reading a flat-volume Q4 for the first time?

I work with boards of UK consumer businesses on exactly this: the plan that holds when the market does not help. No pitch. A conversation.

[Email Matthew](mailto:matthew@matthewgauntassociates.co.uk)

MG

Matthew Gaunt

Commercial Board Advisor and Non-Executive Chair, Matthew Gaunt Associates

Board Advisory Artificial Intelligence Retail Strategy Grocery Employment Law Energy Costs

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