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War, energy prices and impending rise in National Insurance make perfect storm for prices warns BRC

Prices rising across all sectors

Shop Price annual inflation accelerated to 2.1% in March, up from 1.8% in February. This is above the 12- and 6-month average price increases of 0.1% and 1.1%, respectively. This marks the highest rate of inflation since September 2011.

Food inflation accelerated to 3.3% in March, up from 2.7% in February. This is above the 12- and 6-month average price growth rates of 1.0% and 2.2%, respectively. This is the highest inflation rate since March 2013.

Non-Food inflation accelerated to 1.5% in March, up from 1.3% in February. This is above the 12- and 6-month average price decrease of 0.4% and increase of 0.4%, respectively. This marks the highest rate of inflation since February 2011.

Helen Dickinson OBE, Chief Executive of the British Retail Consortium, comments: “Consumers were hit once again by rising prices, with March seeing the fifth consecutive month of inflation. 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. Wheat prices have risen sharply, while the rise in oil prices has not only impacted domestic energy costs, but also the costs of fertiliser and transporting goods.

“Our 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. 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, NielsenIQ, adds: “With cost-of-living increases accelerating, 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.”

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