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Shop prices rise for consecutive months for first time in five years

UK shop prices increased for the second consecutive month for the first time in five years in September, the latest BRC-Nielsen Price Index shows.

Shop price inflation edged up to 0.2% from 0.1% in August. Non-food deflation hit 0.9% in September from 1% in August.

Helen Dickinson, chief executive of the British Retail Consortium, said: “Global commodity conditions, in particular oil prices, would indicate that there are likely to be further inflationary pressures in the short to medium term, which could lead to further price rises.

“This would be worrying enough for hard-pressed British consumers if we weren’t staring down the barrel of a “no-deal” Brexit. Food prices alone have now been inflationary for more than a year, and the BRC estimates that consumers could face up to a 29% increase in prices of products such as beef in the event of a ‘no-deal’.

“Time is running out for the government to deliver a Brexit deal with a workable backstop arrangement and a clear transition period. This is not good news for UK shoppers who, out of all the stakeholders in the Brexit process, ultimately have the most to lose.”

Mike Watkins, head of retailer and business insight at Nielsen, said: “Despite the return of wage growth across the economy, there continues to be pressure on the consumer wallet, in particular from higher energy and travel costs. The good news for shoppers is that shop price inflation continues to lag the Consumer Price Index and, with the start of the Golden Quarter, and uncertainty around the underlying demand on the high street, retailers have been absorbing supply chain increases. Looking ahead we expect shoppers to maintain their grocery spend by making savings elsewhere in their overall household expenditure.”

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