New data from the British Retail Consortium (BRC) shows that UK retailers passed on price rises to the public for the first time in two years due to rising commodity prices and labour shortages.
Shop prices overall climbed by 0.3% in November, partly due to a 1.1% rise in food prices though non-food prices dipped by 0.1%.
The new headline 0.3% price rise is above the 12- and 6-month average price decreases of 1.2% and 0.6% respectively says the BRC. This is the first time that prices have risen since May 2019 it says.
More expensive Christmas coming
Fresh food inflation accelerated to 1.2% in November up from 0.3% in October. This is above the 12- and 6-month average price growth rates of -0.6% and -0.2%, respectively – and the highest inflation rate since August 2019.
“With food prices rising, and particularly fresh food – which saw the highest inflation since 2019 – we may find some of our Christmas shopping a little more expensive this year,” said BRC chief executive Helen Dickinson.
“Food was also affected by a rise in global food costs where certain staples such as vegetable oil have doubled in price in the past two years.”
With ongoing labour shortages throughout the supply chain expected to continue for some time and no signs that rising costs of transport and commodities will subside, “we expect the rate of inflation to accelerate over coming months,” says Dickinson.
Price inflation and energy expense pressures
The government must also play its part and work with industry to find long-term solutions to the labour shortages, she adds, “as this will help to relieve cost pressures and protect the pockets of the British public who are already facing mounting costs from increasing energy prices and the looming rise in national insurance”.
Mike Watkins, the head of retailer and business insight at NielsenIQ, which collaborates closely with the BRC data, says significant rises in energy and travel costs are adding pressure to household budgets.
“NielsenIQ shopper research shows that 4 in 10 households feel that their spending is constrained and whilst inflationary pressures are now coming from both food and non-food, retailers continue to keep hold back increases in shop prices ahead of Christmas.”