Deflation slows as ‘retailers run out of options’

Overall deflation was 0.3% in August, according to the BRC Nielsen Shop Price Index, a slight deceleration on the 0.4% rate in July. It marked the slowest rate of deflation since November 2013.

In non-food, deflation was its slowest since April 2013 at 1.3%, with the electronics sector experiencing the slowest rate of deflation since the Shop Price Index began in 2006.

Food inflation

Food prices increased 1.3%, with fresh food’s inflation rate, of 0.8%, slowing and ambient food’s inflation rate, of 1.9%, accelerating.

August was the second consecutive month that fresh food inflation slowed, while ambient foods registered their highest inflation rate since December 2013.

‘Running out of options’

BRC chief executive Helen Dickinson said: “The reality is that with protection from hedging policies coming to an end, non-food retailers are running out of options for protecting shoppers from the significant increases in the price of imported goods since the EU referendum in June last year.

“We expect non-food prices to continue trending towards year-on-year inflation.

“The seasonal availability of fruit and vegetables from UK suppliers is currently shielding shoppers from the impact of higher import prices. However, as winter approaches and our dependence shifts to imported goods, that will change.”

She added that price rises would put “an increasing strain on already stretched family budgets” and called for the government to prioritise avoiding “a situation where further tariffs and administrative costs lead to price increases on top of those already being faced by consumers”.