Shop price inflation hits two year high

Shop price inflation reached its highest level in more than two years in October as rising energy and transport costs pushed up prices, according to the British Retail Consortium (BRC).

Annual shop price inflation increased to 2.1%, from 1.4% in September, while food inflation rose to 2.9%, driven by higher prices for tinned and packaged goods. Non-food inflation climbed to 1.7%, with furniture, flooring and DIY products particularly affected.

Helen Dickinson, Chief Executive of the BRC, said “Shop price inflation rose to its highest level in two and a half years. The dam is starting to break on the huge wave of costs retailers have absorbed over the last two years. Food inflation rose again, driven by ambient groceries, although retailers still delivered plenty of promotions on sweet treats ahead of Halloween. Non-food inflation climbed to an almost three-year peak as high energy and transport costs pushed up prices, with furniture, flooring and DIY particularly affected this month.

“The message to the Chancellor ahead of tomorrow’s Budget could not be clearer: act now or prices will keep on rising. Retailers cannot endlessly swallow higher business rates, employment costs, energy bills, and packaging taxes. Without a change of course, October’s jump in inflation is only the beginning. Our recipe for the Chancellor is simple. Slash employment costs. Cancel the 3.5% business rates increase. Remove shops from the high-value surtax. Otherwise, households will end up paying the price.”

Mike Watkins, Head of Retailer and Business Insight, NIQ, said, “With global supply chain pressures building over the last 6 months, higher inflation across retail was to be expected. However, price cuts by food retailers since the end of summer have delayed some of the impact and high street retailers, faced with consumers becoming more cautious in the face of higher energy and fuel costs, will now be more reliant on promotions to drive discretionary non-food spend.”