British shop prices rise for first time in five years
British shop prices have risen for the first time in five years as hot weather and the rising price of oil conspired to add to inflationary pressure.
Shop prices increased by 0.1 per cent in August 2018 compared to last year, figures from the British Retail Consortium, prepared by Nielsen, will today show.
The rate of food price inflation hit an annual rate of 1.9 per cent, up from 1.6 per cent in July, as hot weather reduced the supply of British foods.
Read more: Scrapping 1p and 2p coins would have "no significant impact on prices"
Meanwhile, global oil prices have risen steadily for much of the past year, raising the price of fuel for transport and agricultural equipment, and some agricultural commodities such as wheat have become more expensive – although the effects of threatened trade tariffs have also depressed others.
For non-food products prices fell by one per cent in the year to August, although they rose by 0.8 per cent in volatile monthly figures. The annual fall still represents a significant easing of deflationary momentum, with an annual price drop of 1.4 per cent recorded in the previous month.
Helen Dickinson, chief executive of the BRC, which represents large retailers, said retailers had seen "significant increases in costs in the supply chain", although added that price increases for consumers were being kept to a minimum.
However, she warned that the inflationary pressures from higher shop prices "pale in comparison to potential increases in costs" if the UK leaves the EU without a deal in March 2019. Economists expect the pound to fall steeply in the event of a no-deal scenario, which would raise the cost of imported products.
Mike Watkins, head of retailer and business insight at Nielsen, said the rise in quantities of food and drink bought during the summer may have contributed to higher prices, but added that there is still "limited inflationary pressure coming from retail at the moment."