The British Retail Consortium (BRC) warned today that any further tax rises would fuel inflation, after revealing that the pace of shop price rises accelerated in September, with increases in home improvement and gardening goods offsetting stabilising food prices.
The BRC-NIQ Shop Price Monitor showed inflation rose to 1.4% in September, up from 0.9% in August and above the three-month average of 1.0%.
The data suggests that a year and a half of deflation on non-food goods is set to come to an end in the coming months, with prices just 0.1% lower year-on-year in September compared with a drop of 0.8% in August.
Annual food price inflation, which has been accelerating all year, was unchanged at 4.2%, with fresh food and ambient food inflation remaining at 4.1% and 4.2% respectively. However, the BRC noted that increased labour and energy costs were continuing to push up input prices for many farmers, with dairy and beef prices remaining high.
The trade body’s Chief Executive, Helen Dickinson, noted that households were finding shopping increasingly expensive. “The impact on retailers and their supply chain of both global factors and higher national insurance and wage costs is playing out in prices for consumers,” she said.
Dickinson warned that the EPR packaging tax, set to take effect in October, will put further upward pressure on inflation. “While retailers continue to absorb higher costs as much as possible and deliver value to customers, any further tax rises in the upcoming Budget would keep shop prices higher for longer,” she said.
“Ultimately, it is British households who will bear the consequences—positive or negative—of the Chancellor’s decisions.”
Meanwhile, Mike Watkins, the head of business insight at NIQ, noted that low consumer confidence meant retailers were likely to continue offering promotions and deals to drive sales.
“With inflationary pressures persisting, many shoppers remain concerned about their personal finances and are becoming increasingly price-sensitive,” he said.
NAM Implications:
- Adding to ‘uncertainty’ pressures must be the impact of consumer perception of ‘everything going up in price’.
- And the next budget taxes/increases could prove to be a tipping point.
- All over to you Chancellor…
