Responding to the latest CPI inflation figures, which show headline inflation rose to 2.9% and food inflation falling to 1.3%, Harvir Dhillon, lead economist at the British Retail Consortium (BRC), says: “Last month, inflation rose for the first time since March, in large part due to the lifting of the energy price cap.
"But there was some good news for consumers as food inflation slowed, with prices for pasta, olive oil and fresh fruit all falling on the month, demonstrating that strong competition among grocers is firmly keeping a lid on people’s weekly shop, despite successive supply chain shocks. By discounting everyday essentials and delivering value, retailers are actively shielding consumers from the inflationary headwinds sweeping through the economy.
“Keeping inflation under control must be an urgent priority for this Government. Retailers have competed fiercely and managed to keep the cost of food and essentials down for shoppers, but the rising cost of Government policies puts this in jeopardy. The upcoming Budget is a crucial test. If ministers can reduce the cost of doing business by slashing standing charges on energy bills, cutting the cost of employment and rebalancing the business rates burden away from retail, those savings can be passed directly to customers at the checkout, keeping inflation at bay for households continuing to face rising bills.”
Furniture, household equipment and maintenance inflation rose to 1.0% in July, from -0.2% in June.
Andrew Phillips, MD of PoS credit provider V12 Retail Finance, comments: "Today's bump in inflation to 2.9% is an unwelcome reminder that the cost of living pressures facing households have not disappeared. The bump from 2.6% in June has been primarily led by elevated energy prices, placing renewed pressure on household budgets just as many consumers had started to feel some degree of financial relief.
"What we continue to see across the retail finance market is a consumer who remains willing to spend, but who is increasingly selective and considered in their purchasing decisions. Families are prioritising larger purchases that they view as necessary or capable of delivering long-term value, while carefully managing discretionary expenditure.
"With inflation proving more persistent than many had hoped, affordability will remain a central consideration for consumers in the months ahead.
"There are, however, some offsetting factors. A softer labour market may reduce pressure on the Bank of England to tighten monetary policy further, which should provide some reassurance to both households and retailers. Against that backdrop, access to transparent and responsible finance options will continue to play an important role in helping consumers manage significant purchases while maintaining control of their finances."
