Shop prices hit a new high in August, according to the latest BRC-NielsenIQ Shop price Index. Shop price annual inflation accelerated to +5.1% in August, up from +4.4% in July, marking another new record since the index started in 2005.
However, of that, non-food inflation decelerated to +2.9% in August, down from +3.0% in July (which still remains near the series’ high in this category).
Helen Dickinson OBE, chief executive of the British Retail Consortium (BRC), says: “Mounting cost pressures up and down supply chains meant shop price inflation hit a new high in August. The war in Ukraine, and consequent rise in the price of animal feed, fertiliser, wheat and vegetable oils continued to push up food prices. Fresh food inflation in particular, surged to its highest level since 2008, and products such as milk, margarine and crisps saw the biggest rises.
“The rise in shop prices is playing into wider UK inflation, which some analysts are predicting could top +18% in 2023. The situation is bleak for both consumers and retailers, but retail businesses will remain committed to supporting their customers through offering discounts to vulnerable groups, expanding value ranges, fixing prices of essentials, and raising staff pay. However, as retailers also grapple with growing cost pressures, there is only so much they can shoulder. The new Prime Minister will have an opportunity to relieve some of the cost burden bearing down on retailers, like the upcoming increase in business rates, in order to help retailers do more to help their customers.”
Mike Watkins, head of retailer and business insight, NielsenIQ, adds: “Inflation continues to accelerate and shoppers are already cautious about how much they spend on groceries, with a fall in volume sales at supermarkets in recent months. We can expect this level of food inflation to be with us for at least another six months but hopefully some of the input cost pressures in the supply chain will eventually start to ease. However, with further falls in disposable incomes coming this autumn as energy costs rocket again, retail spend will come under pressure in the all-important final quarter of the year.”