For consumers it’s not necessarily good news, but for merchants it could well be a boost to business: according to the latest report from the BRC (British Retail Consortium), UK retail prices have risen for the first time in 63 consecutive months. As a merchant, does this give you cause for optimism? Probably not. The whole story, like your experience, is rather more complex.
There are numerous reasons for the inflation in prices, and several are related to the weather and how that has affected food production and prices. Non-food items, though, have continued to experience deflation but the pace has slowed. You can read the full details here.
Higher food inflation is the result of both the spell of hot, dry, weather this summer, which reduced yields of some foods produced in the UK, and the increases in the prices of oil and agricultural products on global markets earlier in 2018.
And the BRC also sounds further caution. There’s also little doubt that we’ve got more uncertainty coming our way as the terms of Brexit are thrashed out. Even the question of whether there will be a deal or no between the UK and EU is up in the air. And also don’t forget that the Prime Minister thinks no deal is better than a bad deal. And consider too that the conditions of no deal, as revealed by the government last week, don’t look entirely positive. Notably the BRC suggests that no deal could be dangerous:
Despite significant increases in costs in the supply chain, this month’s figures show that retailers are keeping price increases faced by consumers to a minimum. However, current inflationary pressures pale in comparison to potential increases in costs retailers will face in the event the we leave the EU without a deal. If that does happen retailers will not be able to shield consumers from price increases. The EU and UK negotiating teams must deliver a Withdrawal Agreement in the coming weeks to avoid the severe consequences that would result from such a cliff edge scenario next March.
– Helen Dickinson OBE, Chief Executive, British Retail Consortium
