Shop prices increased for two consecutive months – the first consecutive growth in five years – according to the latest British Retail Consortium and Nielsen Shop Price Index.
Inflation increased by 0.2% from the previous month with food being the main driver for the hike in prices. Food showed a 1.9% year-on-year increase, while ambient food and shelf-stable food rose by 2.4% and fresh food grew by 1.6%. The price of non-food items fell by 0.9% compared with August.
The BRC said the prospect of a “no deal” Brexit was part of the reason for the higher food prices and predicted consumers could face an price surge of up to 29% for products such as beef if the UK left the EU with no deal.
Helen Dickinson OBE, chief executive, BRC, said: “Overall shop prices were inflationary for the second month in a row in September, the first time in five years that prices have risen in two consecutive months.
“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.
“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, Nielsen: “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.”
He added: “Looking ahead we expect shoppers to maintain their grocery spend by making savings elsewhere in their overall household expenditure.”