Food inflation rises to its highest level in almost a year
Food inflation has risen to its highest level in almost a year as cost pressures begin to weigh on prices.
Food inflation increased to 2.6 per cent year on year in April, against growth of 2.4 per cent in March and above the three-month average of 2.4 per cent, according to the British Retail Consortium (BRC).
Overall shop price inflation – including groceries and general retail – increased to -0.1 per cent year on year in April, against -0.4 per cent in March.
“The days of shop price deflation look numbered as food inflation rose to its highest in 11 months, and non-food deflation eased significantly,” Helen Dickinson, chief executive of the BRC, said.
Mike Watkins, head of retailer and business insight at NielsenIQ, added: “Shoppers continue to benefit from lower shop price inflation than a year ago, but prices are slowly rising across supply chains, so retailers will be looking at ways to mitigate this as far as possible.”
Shop price inflation, April
Around £5bn of extra costs came in for retailers on 1 April from the higher Minimum Wage and higher employers’ National Insurance contributions (NICs), with another £2bn in October when a new packaging tax comes into effect.
Hiring in the retail sector has already fallen by 43.11 per cent year-on-year, according to the latest data from Adzuna.
Along with cost pressures, price competition is heating up due to the Asda’s talk of a “war chest” it will use to lower prices and increase market share, leading to concern that some retailers will be stuck with higher costs they are unable to pass on to consumers.
There has been some concern that the Employment Rights Bill, currently subject to amendments in the Lords, will heap further pressure on retailers – particularly small businesses.
“It is crucial that poor implementation of the upcoming Employment Rights Bill does not add further pressure to costs – pushing prices further up, and job numbers further down,” Dickinson said.