New packaging tax to add to the cost of food in the UK from October
New data from the British Retail Consortium shows shop price inflation increased to 1.4% year on year in September, with the group warning of further hikes in the coming months.
Food inflation was unchanged at 4.2% year on year in September, against growth of 4.2% in August. This is above the 3-month average of 4.1%. Fresh Food inflation was unchanged at 4.1% year on year in September, against growth of 4.1% in August. This is above the 3-month average of 3.8%.
“A year and a half of non-food deflation looks set to come to an end, as inflationary pressures spread beyond food,” said Helen Dickinson, Chief Executive of the BRC.
DIY and gardening saw rising prices, while some back-to-school categories continued to see reductions as retailers offered promotions on electricals such as laptops ahead of the new academic year, she said.
“Food inflation held steady after seven consecutive months of rises but increased labour and energy costs continue to push up input prices for many farmers, particularly of cattle, with dairy and beef prices remaining high.”
Rising costs to hit
Dickinson noted that households are finding shopping increasingly expensive, and that things are likely to get more expensive in the coming months as tax hikes hit.
“The impact on retailers and their supply chain of both global factors and higher national insurance and wage costs is playing out in prices for consumers. The new packaging tax, set to take effect in October, will put further upward pressure on inflation.
“While retailers continue to absorb higher costs as much as possible and deliver value to customers, any further tax rises in the upcoming Budget would keep shop prices higher for longer. Ultimately, it is British households who will bear the consequences – positive or negative – of the Chancellor’s decisions,” she said.
