The latest figures from the British Retail Consortium (BRC) show that shop prices are increasing at their fastest rate since September 2011 as higher energy costs and the war in Ukraine take their toll.
Overall shop price annual inflation accelerated to 2.7% in April, up from 2.1% in March, and above the 12- and 6-month average price increases of 0.4% and 1.5%, respectively.
The BRC data put food inflation at 3.5%, up from 3.3% the prior month and the highest rate since March 2013. Last week, Kantar said grocery price inflation had accelerated to 5.9%.
According to the BRC, fresh food inflation fell to 3.4% in April, down from 3.5% in March, whilst ambient food increased to 3.5%, up from 3.0%. Fierce competition between supermarkets on many everyday essentials was said to have contributed to the slowdown in fresh food inflation.
“Global food prices have reached record highs, seeing a 13% rise on last month alone, and even higher for cooking oils and cereals. As these costs filter through the supply chain, they will place further upward pressure on UK food prices in the coming months,” said Helen Dickinson, Chief Executive of the BRC.
Meanwhile, non-food inflation rose to 2.2% during the period, up from 1.5%. This marks the highest rate of inflation since the price analysis by the BRC began in 2006. Items such as furniture, electricals and books saw some of the highest price rises, exacerbated by disruption at the world’s largest seaport, following Shanghai’s recent Covid lockdown.
Dickinson added: “Retailers will continue to do all they can to keep prices down and deliver value for their customers by limiting price rises and expanding their value ranges, but this will put pressure on them to find cost-savings elsewhere. Unfortunately, customers should brace themselves for further price rises and a bumpy road ahead.”
Mike Watkins, head of retail and business insight at NielsenIQ, warned that surging inflation will negatively affect consumer spending despite retailers’ attempts to keep prices down.
“With food retailing no longer immune to these pressures, supermarkets are reacting by cutting the prices of some everyday grocery products including private label to help limit shop price inflation,” he said.
The Bank of England has warned that overall consumer inflation – which reached 7% in March – could exceed more than 8% this year.
NAM Implications:
- This has to be about consumer perception of increasing inflation i.e. way above the official state.
- The mults are competing on pricennn
- …yet raising prices in tandem.
- Leaving the way open for Aldi & Lidl to grow share by holding/reducing prices at the expense of their much larger global operations.
- Keep in mind that Aldi UK is merely 14% of Aldi’s global sales.
