Shop prices in the UK rose for the first time in more than five years, 63 months entering the inflationary zone.
In August, shop prices rose by 0.1 per cent year-on-year basis, up from the July decrease of 0.3 per cent, said the British Retail Consortium (BRC) in a release on Wednesday (29).
Non-food deflation continued to ease in August to 1.0 per cent from 1.4 per cent recorded in July. This is the lowest rate of deflation in the last five years whereas food inflation jumped to 1.9 per cent in August from July’s rate of 1.6 per cent.
Fresh Food inflation picked up in August when prices increased by 1.5 per cent, from 1.2 per cent recorded in the last month. Ambient Food inflation climbed to 2.5 per cent in August from 2.2 per cent recorded in July.
According to BRC, both higher food price inflation and lower non-food price deflation contributed to the return of shop prices to inflation, after deflation last month. However, shop price inflation remains well below headline consumer price inflation, the result of high levels of competition in the industry.
Hot, dry weather conditions in the current summer season which caused to reduce the yield of some food crops produced in the UK and rise in the oil prices and agricultural products in the international market caused for higher food inflation.
“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 that will leave the EU without a deal. If that does happen retailers will not be able to shield consumers from price increases,” said Helen Dickinson OBE, Chief Executive at British Retail Consortium commenting on the report.
"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," he added.
