Shop prices increased this month by the biggest amount since at least 2005 as the cost of fresh food was driven up further by rising fertiliser, animal feed and transport expenses.
According to the latest BRC-NielsenIQ Shop Price Index, they rose overall by 4.4% year-on-year in July, compared to a rise of 3.1% in June.
Food inflation accelerated from 5.6% to 7.0% after a jump in fresh food from 6.2% to 8.0%. Ambient food inflation increased from 4.8% to 5.7%.
Helen Dickinson, the Chief Executive of the BRC, noted that some of the biggest price rises were seen in dairy products, including lard, cooking fats and butter, as production costs soared.
Meanwhile, non-food inflation accelerated to 3.0% in July, up from 1.9% in June. This was driven by rising shipping prices, production costs, and continued disruption in China.
Dickinson commented: “As inflation reaches new heights, retailers are doing all they can to absorb as much of these rising costs as possible and to look for efficiencies in their businesses and supply chain.
“With households enduring a cost-of-living crunch, retailers are expanding their value ranges to offer the widest variety of goods to those most in need, providing discounts to vulnerable groups, and raising staff pay. Nevertheless, households and businesses must prepare for a difficult period as inflationary pressures hit home.”
Mike Watkins, Head of Retailer and Business Insight at NielsenIQ, added: “Consumers’ household budgets are coming under increasing strain and shelf price increases in both food and non-food have accelerated in recent weeks as more cost prices increases come through the supply chains.
“The grocery industry in particular is under intense pressure as retailers try to shield customers from the full impact of inflation. At the same time, there has been an increase in competitive intensity so customer retention over the summer holiday season will be key to help stem any further fall in volumes.”
