Retail inflation is set to get worse before it gets better, states Helen Dickinson OBE, chief executive of the British Retail Consortium (BRC), outlining the findings from the latest BRC-NielsenIQ Shop Price Index.
Shop price annual inflation accelerated to +2.8% in May, up from +2.7% in April, and marking the highest rate of inflation since July 2011.
Non-food inflation decelerated to +2% in May, settling down from +2.2% in April, yet remains close to the series’ high.
“Retail prices edged up further as commodity, energy and transport costs continued to climb," explains Helen. "Fresh food inflation hit its highest rate in a decade, with items like poultry and margarine seeing some of the largest increases due to soaring costs of animal feed and near-record global food prices. Retailers have been working hard to protect their customers from these rising costs, particularly at a time when households are being impacted by a huge rise in household energy bills.
“It is likely to get worse before it gets better for consumers, with prices continuing to rise and a further jump in energy costs coming in October. With little sign that the cost burden on retailers will ease any time soon, they will be left with little room for manoeuvre, especially those whose supply chains are affected by lockdowns in China and the war in Ukraine. While many people will welcome the Government’s latest announcement of support, uncertainty in the future of energy prices means they may only provide temporary respite.”
Mike Watkins, head of retailer and business insight at NielsenIQ, adds: “The acceleration in food inflation reflects the fact that retailers can no longer absorb the full extent of increased supply chain costs now hitting the industry. Promotions remain close to an all-time low, and price cuts rather than volume-based offers such as multibuy are now the best way for retailers to help their shoppers manage their household budgets.”