UK shoppers could be hit by higher prices in the next few months: Retail boss
While overall shop prices remain unchanged in May, food inflation rose for the fourth consecutive month, data from the British Retail Consortium shows.
Commenting on the country’s latest inflation data, the group noted that fresh foods were the main driver, and red meat eaters may have noticed their steak got a little more expensive as wholesale beef prices increased.
Non-food prices remained in deflation, but this slowed in categories such as fashion and furniture as retailers began to unwind heavy promotional activity. The group noted that prices were falling faster for electricals as retailers tried to encourage spending before any potential knock-on impact from US tariffs.
Increased costs
“With retailers now absorbing the additional £5 billon in costs from April’s increased Employer National Insurance contributions and National Living Wage, it is no surprise that inflation is rearing its head once again,” said Helen Dickinson (Chief Executive of the BRC)
“Later this year, retailers face another £2 billion in costs from the new packaging tax, and there are further employment costs on the horizon from the implementation of the Employment Rights Bill.
“Government must ensure the Employment Rights Bill is fit for purpose, supporting workers’ rights while protecting jobs and investment for growth. If statutory costs continue to rise for retailers, households will have to brace themselves for more difficult times ahead as prices rise faster,” she said.
The latest inflation data shows that:
- Shop price deflation was unchanged at 0.1% year on year in May, against a decline of 0.1% in April. This is above the 3-month average of -0.2%.
- Non-food deflation decreased to 1.5% year on year in May, against a decline of 1.4% in April. This is above the 3-month average of -1.6%.
- Food inflation increased to 2.8% year on year in May, against growth of 2.6% in April. This is above the 3-month average of 2.6%.
- Fresh Food inflation increased to 2.4% year on year in May, against growth of 1.8% in April. This is above the 3-month average of 1.8%.
“Whilst shoppers are seeing savings at the checkout as retailers increase promotional activity, increasing prices is still an extra challenge to consumer spending alongside rising household bills,” said Mike Watkins, Head of Retailer and Business Insight at NielsenIQ.
“And if consumer confidence remains weak, as looks likely, then retailers may have to work harder to encourage shoppers to spend over the summer.”
