Shop prices rise for first time in five years

The latest figures from the British Retail Consortium-Nielsen Shop Price Index reports that shop prices have risen for the first time in more than five years in August, breaking the deflation cycle of 63 months.

In August, shop prices increased by 0.1 percent, up from the July decrease of 0.3 percent, led mainly by a rise in food prices.

Non-food deflation continued to ease in August to 1.0 percent from 1.4 percent in July, to mark the lowest rate of deflation since April 2013. The lower non-food price was driven by a shift in retailers approach to promotional activity the British Retail Consortium stated, as strong demand for summer products earlier in the season has reduced the need for discounting.

However, this does not apply to all categories, as the British Retail Consortium added that clothing remains the category showing the “deepest deflation” and is little changed from last month.

Helen Dickinson, chief executive of the British Retail Consortium, said in a press statement: “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 to potential increases in costs retailers will face in the event the we leave the EU 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.”