Shop price inflation edged up in March as conflict in the Middle East began adding to supply chain costs, according to the BRC.
Easing inflation in food – from 3.5% in February to 3.4% in March – failed to offset upward pressure in other areas, according to the latest monthly BRC-NIQ Shop Price Monitor. As a result, overall shop price inflation increased from 1.1% in February to 1.2% March. It was still below the three-month average of 1.3% despite the increase.
Non-food went from 0.1% deflation in February to 0.1% inflation in March.
BRC CEO Helen Dickinson warned of more inflation to come and called on the government to look again at regulation threatening to add to the cost pressures on businesses, including the Employment Rights Act.
“Shop price inflation edged up in March, despite food inflation easing as dairy prices fell with lower wholesale milk costs,” Dickinson said.
“Higher costs resulting from the conflict in the Middle East are starting to feed into the supply chain. While retailers will work with their suppliers to mitigate the impact on prices as far as possible, inflation will rise, although there are no indications it will reach the peaks of the last spike in April 2023.
“Government needs to look at all the costs that could exacerbate these price rises, from new healthy food rules to trade changes with Europe, the Employment Rights Act and non-commodity charges which make up such a large proportion of energy bills. Ignoring businesses’ concerns risks even higher prices for shoppers.”
Dickinson said the rising inflation in March came despite “promotions on alcohol, TVs and sound systems in the run-up to final Six Nations weekend, as well as on clothing & footwear”.
Among food categories, fresh saw the sharpest inflation, at 4.4% in March, up from 4.3% in February. Ambient food eased from 2.3% to 2% price growth in the same timeframe.
NIQ head of retailer and business insight Mike Watkins said consumers would be spending cautiously and warned further inflation could dampen retail growth.
“Whilst it’s good news that food inflation slowed in recent weeks, shoppers are increasingly conscious of the amount of money they are spending at the checkout, and non-food retailers will be hoping for a good Easter to drive sales,” Watkins said.
“However, if price rises come through the supply chain over the next few months, this has the potential to take the edge off retail growth.”
No comments yet