Rising cost of sugar heaps pressure on shop prices as they reach new high
Shop price annual inflation accelerated to 8.9% in March, reaching a new high with warnings that food prices will peak in the coming months.
The 8.9% figure is up from 8.4% in February and above the three-month average rate of 8.4%.
Food inflation accelerated to 15% in March, up from 14.5% in February and is the highest inflation rate in the food category on record.
According to the British Retail Consortium BRC-Nielsen IQ index, fresh food inflation accelerated to 17% in March, up from 16.3% in February and is the highest inflation rate in the fresh food category on record.
Non-food inflation saw an increase from 5.3% in February to 5.9% in March, above the three-month average of 5.4%. Ambient food inflation accelerated to 12.4% in March, up from 12.2% in February – the fastest rate of increase in the ambient food category on record.
Helen Dickinson OBE, Chief Executive of the British Retail Consortium (BRC) warned that shop price inflation has yet to peak.
“As Easter approaches, the rising cost of sugar coupled with high manufacturing costs left some customers with a sour taste, as price rises for chocolate, sweets and fizzy drinks increased in March,” she said.
“Fruit and vegetable prices also rose as poor harvests in Europe and North Africa worsened availability, and imports became more expensive due to the weakening pound.
“Some sweeter deals were available in non-food, as retailers offered discounts on home entertainment goods and electrical appliances.”
She stressed that food price rises will “likely ease” in the coming months, but it is expected that wider inflation will “remain high”.
“Retailers continue to work hard to keep prices, particularly of essentials, as low as possible by expanding value ranges and offering discounts for vulnerable groups,” she added.
‘Since food prices have risen, retailers have seen more visits but less basket spend’
“Government must also minimise oncoming regulatory burdens, as these will serve as a drag on investment and will ultimately contribute to higher prices for UK consumers.”
Meanwhile, Mike Watkins, Head of Retailer and Business Insight, NielsenIQ said: “Inflation continues to have an impact on the spending power of shoppers and increased energy bills from April will add more pressure.
“Since food prices have risen, retailers have seen more visits but less basket spend, as shoppers manage their weekly food bills by shopping little and more often and seeking out the lowest prices. As Easter approaches some high street retailers will also be offering discounts and promotions to encourage customers to spend.”