The independent retailers association has expressed serious concern following today's (20) announcement that UK inflation rose to 3.8 per cent in July, higher than the expected 3.7 per cent and marking the tenth consecutive month above the Bank of England's two per cent target.
"It is disappointing to see inflation rise to 3.8 per cent. Higher inflation tends to dampen consumer confidence and demand, so it is bad news for the indie retail sector," said Asian Trader columnist and CEO of The British Independent Retailers Association (Bira), Andrew Goodacre. "The cause is undoubtedly a significant rise in business costs across all sectors and there is real concern about the Autumn budget."
Andrew Goodacre, Bira CEO Andrew Goodacre
The latest Office for National Statistics figures show food and non-alcoholic beverages increased by 4.9 per cent year-on-year, with beef, orange juice, coffee and chocolate among the worst-affected products. For independent retailers, many of whom operate on tight margins, these rising costs present a significant challenge in an already difficult trading environment.
Of particular concern to Bira members is the indication that rail fares are likely to rise by 5.8 per cent next year, which will further impact both retailers' operational costs and customers' disposable income. The sustained inflation rate also makes Bank of England interest rate cuts less likely this year, maintaining pressure on businesses with borrowing commitments.
"Independent retailers are feeling the squeeze from multiple directions," added Mr Goodacre. "Rising product costs, increasing operational expenses, and now the prospect of reduced consumer spending power creates a perfect storm for our high street businesses. Many of our members are already operating on razor-thin margins, and this latest inflation data compounds their challenges."
Bira continues to campaign for greater support for independent retailers, including fair business rates, action on retail crime, and policies that protect the future of Britain's high streets.