Shop price inflation returns for first time in over five years

There are fears consumers face more shocks as a result of extreme weather
There are fears consumers face more shocks as a result of extreme weather

Britain’s shop prices have risen for the first time in more than five years as the UK’s sweltering summer heatwave sent the cost of fruit and vegetables soaring.

The latest BRC-Nielsen figures showed overall shop prices rose 0.1% in August - entering inflationary territory for the first time since April 2013.

It comes after food inflation jumped to a seven-month high of 1.9% in August following the recent hot weather, which hit UK crops.

The lowest rate of deflation for non-food items for more than five years also led to the return of shop price inflation, according to the shop price index.

Non-food price deflation eased back further to 1% in August, down from 1.4% in July and the lowest level since April 2013 as strong demand for summer products earlier in the season reduced the need for discounting.

The figures come amid fears consumers are set to face a food price shock over the coming months after this year’s extreme weather.

The Centre for Economics and Business Research (Cebr) warned earlier this week that food prices could rise by at least 5% due to the extended spells of freezing and baking weather seen in 2018.

It estimated households will see food bills rise by around £7.15 a month after the impact on farmers crops from the Beast from the East in February and March, followed by the prolonged summer heatwave in the UK and Europe.

The Cebr said that wholesale “farm gate” prices of some staples rocketed by up to 80% between March and July, with prices rising in particular for wheat, strawberries, carrots and lettuce.

Farmers have also been impacted by rising costs of oil and agricultural products on global markets, according to the British Retail Consortium (BRC).

Its monthly data showed that fresh food inflation picked up to 1.5% in August, up from 1.2% in July and the highest for seven months, while ambient food price inflation accelerated to 2.5% in August, up from 2.2% in July.

The overall shop price inflation figure compared with deflation of 0.3% in July.

But the BRC said shop price inflation still remains well below the wider rate of consumer price inflation - which currently stands at 2.5%.

BRC CEO Helen Dickinson said: “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.”

She echoed growing calls from business groups for a Brexit agreement.

“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,” she said.