Fri, 14th Sep 2018
Food prices in Britain have increased for the first time in more than five years, after the summer heat wave pushed up the price of fruit and veg.
The latest BRC-Neilsen data shows that shop prices, overall, have increased by 0.1 percent in August. This marks the first time that prices have entered inflationary territory since April 2013. Food inflation has jumped to a seven month high, to 1.9 percent, too.
Non-food price deflation eased back down to 1% in August, down from 1.4 percent in July. This is the lowest level since April 2013. Strong demand for summer products meant that there was less need for discounting than normal. These figures mean that consumers could be facing food price shock over the next few months, as food prices could increase by as much as five percent. Households could see food bills increase by £7.15 a month over the next few months.
The squeeze on household incomes is bad news for retailers. Several department stores are already seeking CVAs and potentially facing rounds of store closures, and this trend is only likely to continue as householders face even more pressure on their discretionary spending.
Fears of a no-deal Brexit are also putting pressure on retailers. If the UK leaves the EU without a deal then this could lead to even more food price increases, and increases in the costs of other consumer goods as well, leaving high street stores in an even more difficult position.