Figures from the British Retail Consortium (BRC) show overall shop prices have hit their highest rate of inflation in almost 14 years as businesses grapple with soaring upstream supply chain costs.
According to the BRC-NielsenIQ Shop Price Index, they were up 3.1% on a year ago in June, increasing from 2.8% in May.
Food inflation accelerated the most, hitting 5.6% this month, up from 4.3% in the prior period. This was driven by fresh food inflation, which rose to 6.2%, from 4.5%, as the sector felt the effects of spiralling fertiliser and animal feed costs. The price of ambient goods climbed 4.8%, up from 4.0% previously.
Meanwhile, non-food inflation decelerated to 1.9%, settling down from 2.0% in May.
The BRC’s Chief Executive, Helen Dickinson, noted that households were facing the biggest real-terms cut in income since the at least 1970s.
She stated that retailers remained focused on protecting their customers. “Fierce competition means that retailers will continue to absorb as much of these costs pressures as possible and look for efficiencies in their businesses,” she said.
“Supermarkets are also expanding their value ranges to offer a wider choice for customers trading down and providing discounts to vulnerable groups.”
However, she warned that if costs continue to spiral, the government may need to find ways to help retail businesses support their customers.
Mike Watkins, Head of Retailer and Business Insight at NielsenIQ, added:: “Whilst the fast-moving consumer goods industry is more insulated from any downturn in consumer expenditure, food retailing is not immune.
“As inflation accelerates due to rising energy, travel and now food costs, shoppers are now more likely to cut down on out of home consumption, shop to a fixed budget, switch to cheaper private label and seek out retailers where prices are the lowest.”
NAM Implications:
- If this is a surprise to anyone…
- Please forward details of where one has been for the past year!
- Seriously, the only surprise should be that stakeholders are not ‘what-iffing’ 15-20% inflation now…
