Shop price inflation continues unabated

Shop price annual inflation accelerated to 2.1 per cent in March, up from 1.8 per cent in February, according to the BRC-NielsenIQ Shop Price Index.

With March seeing the fifth consecutive month of inflation, the figure marked the highest rate since September 2011.

Food inflation increased to 3.3 per cent in March, up from 2.7 per cent in February, the highest inflation rate since March 2013. Fresh food inflation rose to 3.5 per cent, up from 3.3 per cent in February and ambient food inflation to 3 per cent, up from 2 per cent.

Non-food inflation accelerated to 1.5 per cent in March, up from 1.3 per cent in February. This marks the highest rate of inflation since February 2011.

“There have been mounting cost pressures throughout the supply chain for some time, including rising wages, input costs, global commodity prices, energy, and transport. Many of these costs are beginning to be exacerbated by the situation in Ukraine, but the full impact on prices is yet to be seen,” commented Helen Dickinson, chief executive of the British Retail Consortium (BRC).

She noted that the Shop Price Index has been rising more modestly than other inflation measures as retailers were able to limit price rises on many essential goods.

“By keeping the prices of key items down and expanding value ranges, retailers are trying to support customers most affected by the cost-of-living squeeze, many of whom will face higher energy prices and National Insurance Contributions from 1 April,” she said.

“With overall inflation likely to rise even higher according to the Bank of England, consumers will not have an easy ride this year. The war in Ukraine, and volatility in commodity markets is likely to further dampen consumer confidence in the coming months.”

Mike Watkins, head of retailer and business insight at NielsenIQ, said the next few months will be a difficult time for consumers:

“Rising food prices will start to impact what’s put in the shopping basket so supermarkets will need to adapt ranges to help shoppers manage what they spend on their weekly groceries. Whilst high street retailers will be competing for discretionary spend that’s coming under increasing pressure,” Watkins commented.