Shop prices have hit their highest rate of inflation in almost 14 years as businesses grapple with soaring supply chain costs and a cut in household spending, figures show.
Shop prices were up 3.1% on a year ago in June, up from 2.8% in May – the highest rate of inflation since September 2008, according to the BRC-NielsenIQ Shop Price Index.
Food inflation jumped to 5.6% in June, up from 4.3% in May, driven by fresh food prices up 6.2% on June last year – the highest inflation rate since May 2009.
The figures follow the Office for National Statistics (ONS) reporting that inflation as measured by the consumer prices index rose from 9% in April to 9.1% last month, a level unseen since February 1982, amid record prices for petrol and the soaring cost of food.
British Retail Consortium (BRC) CEO Helen Dickinson said: “Last month households and businesses were hit by the highest rate of inflation since the 1980s as near-record commodity prices in energy, transport and food filtered through the supply chain.
“Food prices rose sharply, particularly for fresh foods such as cheese which has been affected by the spiralling costs of fertiliser and animal feed.
“As households face the biggest real terms cut in income since at least the 1970s and businesses grapple with upstream supply chain costs, retailers remain focused on protecting their customers.
“Fierce competition means that retailers will continue to absorb as much of these costs pressures as possible and look for efficiencies in their businesses. Supermarkets are also expanding their value ranges to offer a wider choice for customers trading down and providing discounts to vulnerable groups.
“Retailers are working to find more ways to protect their customers from the worst effects of inflation, but if costs continue to spiral, Government may need to find ways to help retail businesses support their customers.”
Mike Watkins, head of retailer and business insight at NielsenIQ, said: “Whilst the fast-moving consumer goods industry is more insulated from any downturn in consumer expenditure, food retailing is not immune.
“As inflation accelerates due to rising energy, travel and now food costs, shoppers are now more likely to cut down on out of home consumption, shop to a fixed budget, switch to cheaper private labels and seek out retailers where prices are the lowest.”