Shop prices in the UK rose 1.5% in the year to August. That is the highest reading in over two years, and it is up from 0.9% in July. The figures come from the monthly shop price index published by the British Retail Consortium and NielsenIQ.
01What the figures show
Food is driving the increase. According to the BRC, food inflation rose to 2.8% in August, up from 2.2% in July. Fresh food inflation was 3%. Ambient food, meaning tinned, dried and packaged goods, was 2.5%.
Non-food inflation was 0.9%, up from 0.2% in July.
Helen Dickinson, chief executive of the BRC, said shop price inflation had risen to its highest level in over two years. She added that it remains well below the headline Consumer Price Index.
Mike Watkins of NielsenIQ said the rise was not unexpected, in part because summer promotions have come to an end.
02What it means for small businesses
A shop price index measures what retailers charge. For an independent shop, cafe or restaurant, the buying price moves first.
That makes the fourth quarter the pressure point. Stock volumes rise, and prices are often agreed before the selling season starts.
There are practical steps that hold a gross margin steady. There is also a difference between borrowing to cover a cost and borrowing to remove one.
We have set both out in the Q4 margin plan for small businesses.
