Shop prices continue to fall, but Brexit looms

Shop prices fell by 1.6 per cent in August, compared to a decrease of 1.3 per cent in July, according to the latest British Retail Consortium (BRC) and Nielsen data.

Non-food prices fell by 3.4 per cent in August, compared to a decline of 2.9 per cent in July, while food inflation eased to 1.3 per cent in August, down from 1.5 per cent in July.

Fresh food inflation slowed to 0.2 per cent in August - the lowest rate of increase since February 2017 - down from 0.9 per cent in July, while ambient food inflation accelerated to 2.8 per cent in August, up from 2.3 per cent in July.

BRC chief executive Helen Dickinson explained that the faster rate of decline was driven by cheaper non-food goods, as many retailers have continued to run promotions and sales in order to entice customers to spend and make up for lost ground during lockdown.

“However, these lower prices are already under threat from increased costs associated with implementing Coronavirus safety measures and are certain to rise if the UK ends the transition period without a trade deal with the EU.

“The absence of a tariff-free deal will lead to higher prices for consumers as thin retail margins force retailers to raise prices in response to higher import costs,” she continued. “Furthermore, without a deal that reduces checks and red-tape, the UK supply chain faces severe disruption, reducing the availability of goods and further raising prices for consumers.”

Mike Watkins, head of retailer insight at Nielsen, added: “With millions of families choosing to holiday in the UK this summer, supermarket sales remain buoyant with sales of fresh foods showing an uptick, helped by hot weather earlier in the month and slowing inflation as seasonal produce becomes available.

“This has offset some of the increases in ambient food and drink – however, deflation continues in much of non-food with retailers still unsure about the levels of demand for next seasons’ ranges.”

Meanwhile, the BRC has launched the Shopworkers’ Protection Pledge, with 11 cross-party MPs signing, while the trade body calls for more.

The BRC Crime Survey, released earlier this year, showed that there were over 400 incidents of violence and abuse against retail staff every day. This is despite retailers spending £1.2 billion each year on crime prevention.

The BRC has long been calling for tougher penalties for attacks on shopworkers through the creation of a specific criminal offence, working closely with the Association of Convenience Stores, Usdaw – the shopworkers’ union, and the National Federation of Retail Newsagents.

Dickinson said: “These incidents have multiplied during the pandemic, which is why we are now calling on MPs from all parties to come together and sign the pledge.

“On behalf of the three million people who work in retail; their families and their communities, there is one simple message: doing nothing is not an option.”

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