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Shop prices 'certain to rise' in no-deal Brexit

A postcards are seen at a souvenir shop on Westminster Bridge in London on January 31, 2020 on the day that the UK formally leaves the European Union. - Britain on January 31 ends almost half a century of integration with its closest neighbours and leaves the European Union, starting a new -- but still uncertain -- chapter in its long history. (Photo by Glyn KIRK / AFP) (Photo by GLYN KIRK/AFP via Getty Images)
The next round of trade talks between the UK and EU begin on 2 October. Photo: Glyn Kirk/AFP via Getty Images

Shop keepers are warning that prices at the tills are “certain to rise” if Britain fails to reach a trade deal with the EU by the end of this year.

The British Retail Consortium (BRC), the trade body for UK retailers, on Wednesday warned that prices would climb if the current Brexit transition period ends in December with no trade deal in place.

“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,” Helen Dickinson OBE, chief executive of the BRC, said in a statement.

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“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. 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.”

Last month the EU’s chief Brexit negotiator Michel Barnier said a trade deal with the UK by the end of the year looked “unlikely.” Barnier said negotiations “were going backwards more than forwards.” Both the UK and EU have blamed each other for the stalemate, which has dragged on since the start of the year.

READ MORE: Pound declines after EU Brexit negotiator says UK trade deal still 'unlikely'

The next round of trade talks begin on 2 October, with Barnier warning that time is running out to reach a deal in time for it to be ratified.

“It is essential that the government ensures the British public are front of mind in their negotiations, otherwise it will be consumers, retailers and the UK economy that will suffer,” Dickinson said.

Dickinson’s Brexit warning came as the BRC reported another month of falling prices in shops. Shop prices fell 1.6% in August, following a 1.3% decline in July. The fall was driven by collapsing prices for non-food items like clothing, beauty products and shoes. Non-food prices fell by 3.4% in August compared to a year earlier.

“Deflation continues in much of non-food, with retailers still unsure about the levels of demand for next seasons’ ranges,” said Mike Watkins, head of retailer and business insight at market research firm Nielsen, which helped to compile the data.

In a separate announcement on Tuesday, the BRC called on MPs to support new legislation to protect shop workers from abuse. The BRC said there were around 400 incidents of verbal or physical abuse of shop workers each day. Home Secretary Priti Patel has backed the BRC’s new campaign.