Shop prices herald imminent return of inflation

Prices fell just 0.1% in September, compared to 0.3% in August, according to the BRC Nielsen Shop Price Index.

Deflation was fuelled by non-food, with prices down 1.5% in September, an acceleration from August when they dropped 1.3%. This figure however was a deceleration from September 2016, when they dropped 2.1%.

Food prices rose 2.2% in September, up from 1.3% in August. Fresh food prices rose 1.8%, up from 0.8% in August, and ambient food rose 2.7% in September, up from 1.9% in August.

BRC chief executive Helen Dickinson 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 to 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.

“Consumers and businesses need the government to reach prompt agreement with the EU on the terms of a Brexit transition, to ensure they aren’t faced with a cliff edge scenario that could mean tariff-related price increases on top of those they are already paying.”