Food inflation in the UK has hit an 11-month high as supermarkets grapple with higher employment costs.
Data from the BRC-NielsenIQ Shop Price Index shows food prices rose at an annual rate of 2.6% in April, up from 2.4% in March and the fastest pace since May last year. Fresh food inflation increased to 1.8% against 1.4% the previous month, while ambient food inflation was unchanged at 3.7%.
Separate data released by Kantar today showed that grocery price inflation now stands at 3.8% – well above the recent low of 1.4% in October last year.
Helen Dickinson, Chief Executive of the BRC, noted that prices of everyday essentials, including bread, meat and fish, all increased between March and April, a period when retailers faced “a mountain of new employment costs” after the hike in national insurance contributions and the minimum wage.
Meanwhile, overall shop prices were down 0.1% in April, against a 0.4% decline in March. This is the smallest contraction since summer 2024, when prices stopped rising. Non-food deflation eased from 1.9% to 1.4%.
Dickinson highlighted that retailers are unable to absorb the £5bn in extra employment costs and the additional £2bn charge when the new packaging tax comes into effect in October. She added: “It is crucial that poor implementation of the upcoming Employment Rights Bill does not add further pressure to costs – pushing prices further up, and job numbers further down.”
Meanwhile, Mike Watkins, head of retailer and business insight at NielsenIQ, which compiles the data with the BRC, noted that shoppers were continuing to “benefit from lower shop price inflation than a year ago, but prices are slowly rising across supply chains, so retailers will be looking at ways to mitigate this as far as possible.”
NAM Implications:
- UK consumers have little confidence in the government’s official stats.
- And are more likely to rely on the commercial sources above…
- Whilst being particularly sensitive to the shrinking purchasing power of ‘the pound in their pocket’.
- Meanwhile, shoppers will hope that an Asda-induced price war will ease their pain…
