- Overall shop price deflation was 0.3% in June
- Food prices increased on average by 1.4%
- Prices of non-food products were down 1.4%
Food prices climbed last month at the highest rate in more than three years and retail price inflation is expected to pick up in the coming months.
While overall shop prices still recorded a rate of deflation of 0.3% in June, food was up 1.4% – the same as in May and the highest rate recorded since January 2014.
BRC chief executive Helen Dickinson said: “Shop prices in June edged closer to ending a four-year deflationary trend, as feed-through from the depreciation of the pound and rising commodity prices continues.
“There is a limit to the ability of retailers to protect consumers by absorbing these impacts into their margins, [and] as a result further price increases are inevitable”
Helen Dickinson, BRC
“The fact that the headline number shows that prices are still down on last year should not be misunderstood.
“The year-on-year numbers belie the fact that prices have been heading upwards for the last six months, it’s just that significant deflation in the second half of 2016 means there has been considerable ground to make up in the year-on-year figures.
“Although heading upwards, the speed of price increases was checked in June. Food price inflation was steady on last month, albeit in firmly positive territory; whilst varied performances in the non-food categories netted out to a slight reduction in deflation.
“The steadying of inflation in June is likely a brief hiatus resulting from the interplay of short-term influences on pricing, such as good weather delaying mid-season promotions into June and the longer-term competitive pressures constraining the pass through of all costs.
“We expect shop price inflation to continue trending upwards in coming months.
“The reality is that cost pressures faced by retailers continue to mount. These pressures arise both from market-driven increases in the underlying cost of goods and as a result of Government policies.
“There is a limit to the ability of retailers to protect consumers by absorbing these impacts into their margins, [and] as a result further price increases are inevitable.
“With that in mind and with the UK’s trading relationships under discussion, it’s of the utmost importance that the Government does all it can to limit any further cost increases that could further adversely impact the finances of the UK’s consumers.”