Fall in shop prices slows as supply chain disruption hits retail costs

Shoppers saw the decline in store prices slow last month, which new figures suggest has increased the inflation outlook.

The BRC-NieslenIQ store price index for August showed that store prices have decreased by 0.8% compared to the previous year.

However, this represented a significant slowdown from a deflation of 1.2% in July, amid concerns that the disruption in the supply chain would increase costs for retailers who could pass some of those costs on to customers.

Helen Dickinson, Chief Executive of the British Retail Consortium (BRC), said: “There are some modest signs that rising costs are starting to be reflected in product prices.”

Deflation in the non-food sector slowed to 1.2% in August, from 1.8% in July.

Some non-food categories, such as electrical appliances, reported a sharp year-over-year increase in inflation due to “global problems with delayed shipments and microchip shortages”.

Meanwhile, food prices declined 0.2% for the month, slowing from a 0.4% decline in the previous month.

Grocery retailers are struggling to keep their prices low, but are coming under pressure from “rising raw material and shipping costs and the Brexit-related bureaucracy,” said Ms. Dickinson.

She added, “Low prices are already threatened, and now the truck driver shortage has created an additional problem with a shortage of 90,000 drivers.

“The disruption has so far been limited, but in the run-up to Christmas the situation could worsen and customers could see a limited selection and higher prices for their favorite products and gifts.

“The government needs to quickly and quickly increase the number of truck driving tests that take place, issue temporary visas for EU drivers and make changes to the funding of truck driver training.

“Without government action, UK consumers will pay the price.”

Mike Watkins, Head of Retailer and Business Insight at NielsenIQ, said, “The next few months will be an important time for retailers to keep prices stable by absorbing increases in their supply chain costs as much as possible.”

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