The latest BRC-NielsenIQ Shop Price Monitor shows food inflation hit 3.7% this month, up from 2.8% in May, as businesses passed on the recent hikes in employer National Insurance contributions and the national living wage.
Fresh food prices rose 3.2% in June, compared with 2.4% the month before, as the prolonged period of dry weather hit harvest yields and drove up the cost of fruit & vegetables. Ambient food inflation came in at 4.3%, up from 3.3% in May.
Price cuts in categories such as DIY and gardening meant non-food remained in deflation, but with a slight easing from -1.5% to -1.2%.
However, the jump in food prices meant overall shop price inflation was 0.4%, up from -0.1% the previous month and the first positive figure in nearly a year.
Helen Dickinson, Chief Executive of the BRC, commented: “Retailers have warned of higher prices for consumers since last year’s autumn budget and the huge rises to employer National Insurance costs and the national living wage.
“We predicted a significant rise in food inflation by the end of this year, and this has been accelerated by geopolitical tensions and impacts of climate change.
“To limit further rises, government must find ways to alleviate the cost pressures bearing down on retailers. The upcoming business rates reform offers such an opportunity, and the government must ensure no shop pays more as a result of the changes.”
Mike Watkins, Head of Retailer and Business Insight at NielsenIQ, added: “Price increases are being driven by broader economic conditions and ongoing changes in the supply chain.
“While the current spell of good weather is helping to boost demand at many retailers, rising prices could become a concern if consumer willingness to spend declines later in the year. Which means we can expect retailers to reinforce their value-for-money messages over the summer.”
NAM Implications:
- No surprises here then..?
- The key is what the media coverage is doing to consumer perception of the personal level of inflation.
- The perception that causes nervous shoppers to postpone/downgrade purchase.
- And given that packaging tax impacts have yet to come…
- …there is no apparent let-up in view.
