Shop prices enter inflation for first time in five years

shop price index

The British Retail Consortium (BRC) and Nielsen’s Shop Price Index found shop prices inflated for the first time in over five years this summer.

Some 63 weeks of consecutive deflation came to an end this August as shop prices rose by 0.1 per cent, up from the July decrease of 0.3 per cent.

Non-food deflation eased up from 1.4 per cent in July to one per cent in August, the lowest rate of deflation since April 2013.

Meanwhile food inflation accelerated to 1.9 per cent in August after July’s rate of 1.6 per cent and fresh food prices rose from a 1.2 increase in July to 1.5 per cent in August.

The BRC and Nielsen pointed out that higher food inflation is the result of both the hot, day weather over summer which reduced yields of foods produced in the UK, and the increase in prices of oil and agricultural products on global markets earlier in the year.

Lower non-food price deflation was attributed to a shift in a number of retailers’ approach to promotional activities, while a strong demand for summer products earlier in the season reduced the needs for discounting on specific product lines.

“Despite significant increases in costs in the supply chain, this month’s figures show that retailers are keeping price increases faced by consumers to a minimum,” said BRC chief executive Helen Dickinson.

“However, current inflationary pressures pale in comparison to potential increases in costs retailers will face in the event that we leave the EU without a deal. If that does happen retailers will not be able to shield consumers from price increases.”

She added, “the EU and UK negotiating teams must deliver a Withdrawal Agreement in the coming weeks to avoid the severe consequences that would result from such a cliff edge scenario next March.”

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