Latest news with #shoppriceinflation
Yahoo
02-07-2025
- Business
- Yahoo
UK's retail inflation is back as govt costs squeeze retailers
Shop price inflation has returned to the UK's high streets, with overall shop prices rising 0.4% year on year in June 2025, reversing the -0.1% decline seen in May. The figures, released by the British Retail Consortium (BRC) and NielsenIQ, reveal mounting cost pressures are translating into higher prices at the tills, particularly in food categories, as retailers grapple with increased government-imposed costs. Food price inflation accelerated to 3.7% in June, up from 2.8% the previous month. Fresh food rose 3.2% year on year, with prices of meat especially affected by elevated wholesale costs and higher wages driven by April's National Living Wage increase. Fruit and vegetable prices also climbed, attributed to hot, dry weather conditions that reduced crop yields across parts of the UK and Europe. Helen Dickinson, Chief Executive of the BRC, said retailers are struggling with 'high wholesale prices and more expensive labour costs,' which are pushing food prices higher. She warned that geopolitical tensions and climate-related events could lead to 'a significant rise in food inflation by the end of this year.' Meanwhile, ambient food inflation, which covers products with longer shelf lives, reached 4.3% in June, up from 3.3% in May, outpacing the three-month average of 3.8%. These figures highlight persistent cost pressures that continue to feed through the supply chain. In contrast, non-food prices remained in deflation at -1.2% year on year in June, though the rate of decline slowed compared with -1.5% in May. Retailers have been discounting products in categories like DIY and gardening to attract customers eager to take advantage of recent sunny weather. Mike Watkins, Head of Retailer and Business Insight at NielsenIQ, noted that while warmer weather is helping to drive footfall and sales, 'rising prices could become a concern if consumer willingness to spend declines later in the year.' He added that retailers will likely need to reinforce value-for-money messaging to maintain shopper engagement over the coming months. Non-food retailers' efforts to stimulate demand reflect broader caution about consumers' spending power as essential costs, including food, energy, and housing, continue to rise faster than wages for many households. Retail industry leaders have pointed to increased Employer National Insurance contributions and the higher National Living Wage introduced in April as key factors behind the return of inflation in shop prices. According to the BRC, these additional costs, set out in last autumn's Budget, have weighed heavily on businesses within just three months of implementation. Dickinson stressed the importance of upcoming government decisions, saying, 'To limit further rises, Government must find ways to alleviate the cost pressures bearing down on retailers. The upcoming business rates reform offers such an opportunity, and the Government must ensure no shop pays more as a result of the changes.' Retailers are also concerned that geopolitical instability and climate-related events could further disrupt supply chains, pushing prices higher. The combined effect of these pressures could prolong the period of elevated shop price inflation, affecting consumers' purchasing power into the second half of 2025. "UK's retail inflation is back as govt costs squeeze retailers" was originally created and published by Retail Insight Network, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Times
01-07-2025
- Business
- Times
Food prices drive shop price inflation to highest in a year
Monthly shop price inflation rose in June for the first time since July last year, driven by higher food prices as businesses passed on rising employment costs to shoppers. Food price inflation rose to 3.7 per cent in June compared with the same period last year and against 2.8 per cent in May, according to figures collected by the British Retail Consortium and NielsenIQ. • Grocery prices rise at fastest pace in more than a year Overall shop price inflation increased to 0.4 per cent compared with June 2024 and a year-on-year decline in prices of 0.1 per cent in May. Non-food prices were 1.2 per cent lower in June compared with a year ago, a narrower decline than the 1.5 per cent recorded in May. It is the first time that overall monthly shop price inflation has risen since July 2024. Helen Dickinson, chief executive of the BRC, said shops were having to pass on higher employment costs arising from the government's tax and minimum wage changes which came into force in April. 'Within three months of the costs imposed by last autumn's budget kicking in, headline shop prices have returned to inflation for the first time in close to a year,' she said. She added that the effect of government policy on prices had been 'accelerated by geopolitical tensions and impacts of climate change'. Meat prices had been affected by high wholesale prices and more expensive labour costs, while fruit and vegetable prices increased due to hot, dry weather reducing harvest yields, she said. Higher food prices increase pressure on low-income households in the UK, who spend a relatively larger share of their monthly income on necessities. Deflation in non-food goods continued as retailers cut prices, particularly in DIY and gardening 'so customers could make the most of the sunshine', the consortium said. Dickinson called on the government to 'find ways to alleviate the cost pressures bearing down on retailers' including via business rates reform. The official overall inflation rate for the UK remained at 3.4 per cent in the year to May, the highest for more than a year and above the Bank of England's target rate of 2 per cent. Food prices are at their highest since February 2024, according to official figures. The conflict between Iran and Israel has prompted concerns that higher oil prices could fuel a fresh round of inflation.
