Store prices hit their highest rate of inflation in nearly 14 years as businesses grapple with soaring supply chain costs and a reduction in household spending, figures from the British show Retail Consortium (BRC).
They were up 3.1% from a year ago in June, compared to 2.8% in May – the highest inflation rate since September 2008, according to the BRC Stores Price Index – NielsenIQ.
Food inflation jumped to 5.6% in June from 4.3% in May, driven by a 6.2% rise in fresh food prices compared to June last year – the rate of highest inflation since May 2009.
The figures follow the Office for National Statistics reporting that inflation as measured by the consumer price index rose from 9% in April to 9.1% last month, a level not seen since February 1982, amid record high gasoline prices and soaring food prices.
BRC chief executive Helen Dickinson said: “Last month, households and businesses were hit by the highest rate of inflation since the 1980s, as near record high commodity prices in the energy, transport and food sectors have infiltrated the supply chain.
“Food prices have risen sharply, especially for fresh foods such as cheese, which have been affected by soaring fertilizer and feed prices.”
She said retailers remained ‘focused on protecting their customers’, adding: ‘Fierce competition means retailers will continue to absorb these cost pressures as much as possible and seek efficiencies in their operations. . Supermarkets are also expanding their value ranges to provide greater choice for customers who bargain and offer discounts to vulnerable groups.
“Retailers are scrambling to find other ways to shield their customers from the worst effects of inflation, but if costs continue to soar the government may need to find ways to help retailers to support their customers.
Mike Watkins, head of retail and business insights at data firm NielsenIQ, said: “While the fast-moving consumer goods industry is more insulated from any downturn in consumer spending, food retail is not immune.
“As inflation accelerates due to higher prices for energy, travel and now food, shoppers are now more likely to reduce out-of-home consumption, buy on a fixed budget, switch to cheaper private labels and seek out retailers with the lowest prices.”