UK shop price inflation hits highest point since March 2013

Shop prices have reached a six-year high, data published on Wednesday showed, as retailers started to pass the cost of a weaker pound and higher oil prices onto consumers.

According to the BRC-Nielsen Shop Price Index, shop price inflation was 0.7% in February, up on January’s 0.4% and the highest since March 2013.

Non-food prices rose for the first time in six years as well, up by 0.2% compared to a decrease of 0.2% in January. Food inflation rose to 1.6% from 1.5%, and fresh food inflation from 1.2% to 1.7% – the highest rate since January 2018.

Ambient food inflation, however, was at its lowest rate since May, easing to 1.5% in February from 1.9% in January.

Non-food prices are normally higher month-on-month in February, as full-price products are introduced following discounting in January, as old stock lines are cleared. But this is the first time in six years that prices are higher year-on-year.

Helen Dickinson, chief executive of the British Retail Consortium, said cost pressures – including currency depreciation since 2016 and last year’s oil price rises – had been gradually building in supply chains, and were now being fed through into prices.

She added: “While price rises over the last six months have been relatively modest, a no-deal Brexit would have a much more immediate and dramatic effect. If this happens, prices of both food and non-food would rise as a result of any new tariffs, the cost impact of any delays at borders, increased administration and the likely currency depreciation.”

Mike Watkins, head of retailer and business insight at Nielsen, said: “While shop prices have moved upwards slightly, economic growth is slowing and there is still weak retail growth. So, for as long as shoppers continue to be cautious, it will be difficult for the industry to pass on in full any cost price increases coming through the supply chain.”