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Shop prices 'teetering' on edge of inflation

Shop prices are on the verge of entering inflationary territory after reaching the shallowest deflation level in the last four years according to new figures.

FOOD & DRINK

Shop prices 'teetering' on edge of inflation

Shop prices are on the verge of entering inflationary territory after reaching the shallowest deflation level in the last four years according to new figures.

The data from the British Retail Consortium and Nielsen in the monthly shop price index reveals that prices fell by just 0.1% in September compared to a 0.3% year-on-year decline in August.

Non-food price deflation accelerated to 1.5% in September, from 1.3% in August.

Meanwhile, food prices increased by 2.2% in the month, up from 1.3% in August as a global milk shortage pushed up prices of butter and rising cereal prices seen earlier in the year began to feed into prices on the shelves.

Helen Dickinson, BRC chief executive, said: “Overall shop price deflation reached an all-time low in September with prices now teetering on the edge of inflation.

“Retailers’ efforts to shield shoppers from the impact of higher import prices of basic non-food items are holding out for now. However, as more non-food retailers’ hedging facilities come to an end this autumn, and as public policy costs mushroom, consumers are likely start feeling an additional pinch on these products.

“This more challenging outlook for consumers going forward is made more ominous by the recent uptick in producer price inflation - the first since February - which is adding further inflationary pressures on the horizon. Stretched family budgets will continue to feel the strain as increases in the price of the weekly shop add to overall rising inflation which continues to outpace wage growth.”

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