Data released today confirms that labour shortages and surging costs have pushed overall retail prices higher for the first time since May 2019.
The British Retail Consortium’s (BRC) Shop Price Index shows a 0.3% rise in November compared to the same month last year. This follows a 0.4% decline in October and brings to an end a two and a half year period of deflation.
BRC Chief Executive Helen Dickinson said: “The impact of labour shortages, rising commodity prices and transportation costs have now very clearly taken their hold on consumer prices.”
The BRC’s index showed prices for non-food products still fell last month, but by only 0.1%. This was the slowest decline since May 2019 and is down sharply from a 1% fall the month before.
Meanwhile, food inflation, which accelerated to 1.1% from 0.5% in October, was the highest since November last year.
Up from 0.3% in October, fresh food prices grew by 1.2% – the sharpest increase since August 2019. Ambient food inflation was up by 0.9%, against 0.8% the previous month.
“With food prices rising, and particularly fresh food, we may find some of our Christmas shopping a little more expensive this year,” said Dickinson.
She highlighted that food inflation was also being driven by a rise in global food costs where certain staples, such as vegetable oil, have doubled in price in the past two years.
“With ongoing labour shortages throughout the supply chain expected to continue for some time, and no signs that rising costs of transport and commodities will subside, we expect the rate of inflation to accelerate over coming months,” Dickinson added.
She stated that retailers were doing all they could to mitigate the impacts for their customers.
“Government also must play its part and work with industry to find long-term solutions to the labour shortages as this will help to relieve cost pressures and protect the pockets of the British public who are already facing mounting costs,” Dickinson said.
The BRC’s Shop Price Index data comes after the official consumer price index (CPI) measure of inflation rose to a ten-year high of 4.2% in October. Covering household costs such as energy and petrol, as well as retail prices, it has been predicted by the Bank of England to reach 5% in the coming months.
NAM Implications:
- The only problem is why consumer perception of shelf price inflation is much higher than the official 4.5%?
- …and why some suppliers feel compelled to ‘shrinkflate’ in order to disguise 20%+ price increases.
- We have a very worried population out there…
- …uncertain about jobs, health, inflation…
- …unwilling to accept (and pay for) anything less than demonstrable value for money…
- …and assurances to the contrary will need more evidence/persuasiveness.
