Responding to the latest CPI inflation figures, which show headline inflation remaining unchanged at 3.8% and food inflation rising to 5.1%, Dr Kris Hamer, director of insight at the British Retail Consortium (BRC), says: “Food inflation climbed above 5% in August for the first time in 18 months as rising employment costs and poor harvests drove up retailers’ costs. With food inflation now outpacing wages, many families will be struggling with the rising cost of living.
"Despite the increase, headline inflation held steady, as declines in categories such as transport and clothing and footwear – driven in part by retailers discounting the last of their summer collections – offset upward pressures. There was some good news in food as key staples such as cereals and pasta fell in price on the month."
CPI inflation across furniture, household equipment and maintenance rose to 0.8% in August, up +0.1% MoM.
“Households across the country are noticing the increasing cost of their weekly shop," Kris continues. "Retailers are doing everything they can to deliver great value for their customers, but are unable to absorb the £7b in costs they have been landed with this year thanks to rising costs of National Insurance, higher NLW, and a new packaging tax.
"The Chancellor can help turn the tide at the Budget by delivering a meaningful business rates reduction, with no shop paying more as a result. If the Government instead chooses to burden the industry with more costs, then it will be households who feel the pinch as they go about their weekly shop.”
Andrew Phillips, MD of PoS credit provider V12 Retail Finance, comments: "UK headline inflation remained unchanged at 3.8% in the 12 months to August, following the unexpected rise in July. While it is a measured relief to see the figures align with consensus expectations, the Bank of England still anticipates inflation will climb to 4% next month before beginning to ease.
"The headline rate continues to be driven upwards by elevated food and fuel costs. Meanwhile, core inflation, which excludes the more volatile components of food, alcohol and tobacco, rose by +3.6%, again broadly in line with forecasts.
"Given that core CPI, the Bank of England’s preferred measure, remains well above the 2% target, any immediate monetary easing appears unlikely. As a result, borrowing costs for UK consumers, including mortgages and loans, are expected to stay elevated for the time being."
