Retail inflation highest for over a decade

Shop prices in the UK are continuing to climb, and experts have warned that the situation for consumers will “get worse before it gets better”.

Annual shop price inflation rose to 2.8% in May, from 2.7% in April, according to the latest BRC-NielsenIQ Shop Price Index. This is above the 12- and 6-month average price increases of 0.7% and 1.9%, respectively, and is the highest rate since July 2011.

“Retail prices edged up further as commodity, energy and transport costs continued to climb,” said Helen Dickinson, chief executive of the British Retail Consortium.

“It is likely to get worse before it gets better for consumers with prices continuing to rise and a further jump in energy costs coming in October.”

Dickinson added that retailers will be left with little room for manoeuvre, especially those whose supply chains are affected by lockdowns in China and the war in Ukraine.

Rising food prices in May offset the discounts and promotions offered by retailers on clothing and homeware goods.

Food inflation accelerated to 4.3%, from 3.5% in April and the highest level since April 2012.

“The acceleration in food inflation reflects the fact that retailers can no longer absorb the full extent of increased supply chain costs now hitting the industry,” explained Mike Watkins, head of Retailer and Business Insight at NielsenIQ.

“Promotions remain close to an all-time low and price cuts rather than volume-based offers such as multibuy are now the best way for retailers to help their shoppers manage their household budgets.”