Shop price inflation increases as ‘storm clouds loom’ amid Middle East crisis
New figures reveal shop price inflation edged upwards in March as rising costs linked to the conflict in the Middle East began to impact supply chains.
Data from the British Retail Consortium (BRC) and NIQ found that store prices overall were 1.2% higher than a year ago, up from 1.1% in February but still below the three-month average of 1.3%.
The BRC warned that despite “subdued” inflation, “storm clouds are looming”. The headline figure rose even as food inflation eased slightly from 3.5% to 3.4% due to falling dairy prices and falling wholesale milk costs.
Non-food inflation reversed the 0.1% decline in February and rose to 0.1%.
This comes despite retailers offering promotions on alcohol, TV and sound systems ahead of the Six Nations final round, as well as discounts on clothing and shoes to attract consumers.
BRC CEO Helen Dickinson said: “High costs resulting from conflict in the Middle East are beginning to be reflected in supply chains.
“Inflation will rise, although retailers will work with their suppliers to reduce the impact on prices as much as possible, but there is no indication that inflation will reach the highs of the last rise in April 2023.
“The government needs to look at all the costs that could drive these price rises further, from new healthy food rules to trade changes with Europe, the Employment Rights Act and non-commodity charges making up the bulk of energy bills. Ignoring businesses’ concerns could lead to even higher prices for shoppers.”
Mike Watkins, Head of Retail and Business Insight at NIQ, said: “While it is good news that food inflation has slowed in recent weeks, shoppers are becoming increasingly conscious of the amount of money they spend at the till and non-food retailers are hoping for a good Easter to boost sales.
“However, if price increases occur across the supply chain over the next few months, this has the potential to negatively impact retail growth.”
