Shop prices rise for first time in five years as retail chief warns that no-deal Brexit will have ‘severe consequences’ for inflation
- Overall shop prices rose 0.1 per cent in August according to the BRC and Nielsen
- It was driven by food inflation as hot weather meant some foods were sparse
- BRC boss warned that shop prices will soar if the UK has a ‘cliff edge’ Brexit
Shopkeepers are struggling to keep a lid on prices, a study has found, with the cost of products entering inflationary territory for the first time in five years.
After falling 0.3 per cent in July, shop prices rose 0.1 per cent in August, according to the closely watched British Retail Consortium and Nielsen shop price index, driven by a 1.9 per cent hike in food prices.
It comes as retailers are faced with spiralling wage, commodity and sourcing costs, triggered in part by the heatwave and a weak pound.
Food prices jumped 1.9% in August, caused by the summer heatwave and rising costs
Food prices rose in August as the long spell of hot, dry, weather reduced yields of some foods produced in the UK, while oil and agricultural costs increased across global markets.
BRC boss Helen Dickinson praised retailers for keeping price rises to a minimum and warned there would be worse to come if the UK crashes out of the EU without a deal.
‘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.
‘However, current inflationary pressures pale in comparison with the potential increases in costs retailers will face in the event the we leave the European Union without a deal. If that does happen, retailers will not be able to shield consumers from price increases.’
‘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,’ she said.
Fashion prices fell the most last month as many firms held big summer sales
Prices of non-food items, such as clothing, electricals and toys, fell last month, but at their lowest rate since April 2013.
Shop price inflation remains well below headline Consumer Price Inflation, as the industry is fiercely competitive, and retailers use discounting and promotions to encourage shoppers to spend.