Ominous warning of inflationary hike in shop prices
SHOP prices in the north are on the verge of returning to "inflationary territory", a local industry body has warned.
The Northern Ireland Retail Consortium believes customers could be paying more at the tills sooner rather than later after prices on the most commonly bought products fell at their shallowest rate for four years.
In September, UK shop prices reached the shallowest deflation level in the last four years of 0.1 per cent, with prices falling just 0.1 per cent compared to a 0.3 per cent year-on-year decline in August. The figures are based upon the 500 most commonly bought products.
The Nielsen Shop Price Index further shows that food prices increased from 1.3 per cent in August to 2.2 per cent in September, while non-food price deflation accelerated to 1.5 per cent in September, from 1.3 per cent in August. Fresh food inflation gained a full percentage point in September, up to 1.8 per cent from 0.8 per cent in August.
Aodhán Connolly, director of the Northern Ireland Retail Consortium believes prices are now teetering on the edge of inflation.
“Shop prices in Northern Ireland are on the cusp of returning to inflationary territory, after four years of falling prices. Retailers are working hard to keep prices down, but with exchange rate movements, higher global food commodity prices and mushrooming public policy costs, retailers are now regrettably being forced to pass some of this onto customers.
“Consumer demand has often proven a reliable source of growth in the economy but this will be tested in the period ahead, as our consumers find themselves assailed by rising overall inflation, uncertainty around Brexit, and with statutory rises in employee pension contributions next Spring. That's why Northern Ireland consumers need an Executive now to design and implement a programme for government that puts them first," he added.
Chief executive of the British Retail Consortium, Helen Dickinson said consumers are likely to start feeling the pinch.
“This more challenging outlook for consumers going forward is made more ominous by the recent uptick in producer price inflation - the first since February - which is adding further inflationary pressures on the horizon. Stretched family budgets will continue to feel the strain as increases in the price of the weekly shop add to overall rising inflation which continues to outpace wage growth.
“Consumers and businesses need the Government to reach prompt agreement with the EU on the terms of a Brexit transition, to ensure they aren't faced with a cliff edge scenario that could mean tariff-related price increases on top of those they are already paying.”