Food inflation decelerated to 5.0% in February, down from 6.1% in January and marks the 10^th deceleration in the food category.

Additionally, fresh food inflation slowed further in February, to 3.4%, down from 4.9% in January, its lowest since February 2022. Meanwhile ambient food inflation decelerated to 7.2% in February, down from 7.7% in January, and the lowest since July 2022.

Chief Executive of the British Retail Consortium, Helen Dickinson said there was good news for consumers.

“Food prices fell month-on-month with drops in fresh food including meat, fish and fruit. This was driven by easing input costs for energy and fertiliser while retailers competed fiercely to keep prices down,” said Ms Dickinson.

PRICE CUTS

“Easing supply chain pressures have begun to feed through to food prices, but significant uncertainties remain as geopolitical tensions rise. Prices of non-food goods will be more susceptible to shipping costs, which have risen due to the re-routing of imports around the Cape of Good Hope.

“Domestically, retailers face a major rise to their business rates bills in April, determined by last September’s sky-high inflation rate. April’s rates rise should be based on April’s inflation, and the Chancellor should use the spring Budget to make this correction, supporting business investment and helping to drive down prices for consumers.”

Head of Retailer and Business Insight at NielsenIQ, Mike Watkins added: “shop price inflation has slowed and the underlying trend in prices will be downwards over the next few months.

“Since the start of the year, food retailers in particular have reduced prices as well as passing on price cuts coming through supply chains. For high street retailers faced with weaker demand, keeping prices stable over the next few months will be key to encourage customers to spend.”

The post Food prices fall but risks remain: BRC first appeared on Neighbourhood Retailer.

The British Retail Consortium said this was down to weak consumer confidence continuing to hold back spending.

UK total retail sales increased by 1.7% in December, against a growth of 6.9% in December 2022 and below the three-month average growth of 2.3%.

Food sales increased 6.8% on a total basis over the three months to December and for the month of December, food was in growth year-on-year.

Helen Dickinson OBE, Chief Executive of the BRC said this year looks to be another challenging year.

“The post-Christmas sales were unsuccessful in enticing spend in areas such as furniture and homeware, with households remaining cautious about making larger purchases,” she said.

“Sales saw a slight uptick in the week leading up to Christmas as consumers scrambled to purchase last-minute gifts, particularly online, due to the wet weather.

“2024 looks to be another challenging year for retailers and their customers, and spending will continue to be constrained by high living costs.

“Retailers will also have to juggle various cost pressures, including the rise to business rates this April. This will be compounded by other emerging issues, such as the disruption to shipments from the Far East via the Red Sea.”

UK Head of Retail at KPMG, Paul Martin added that the festive feel-good factor was lacking this year, with retailers facing a disappointing December.

“Christmas shoppers ditched clothing, jewellery and technology gifts, opting for beauty, health and personal care products, which, along with food and drink drove festive sales this year,” he said.

“Online sales remained in negative territory, although the decline was weaker than seen in recent months with sales down nearly 1% on last year.

“Retailers rolled out promotions that lasted longer and were deeper than last year and higher promotional activity amongst supermarkets saw grocery price inflation fall at its fastest rate on record in December. Whilst promotions are margin dilutive, retailers have done some great work in re-engineering supply chains to make them more cost effective, which has given more room to push ahead with discounting, and given the current environment, this is likely to stay with us for a while.

“Despite falls in inflation, an upcoming cut in national insurance rates, and some consumers having more money in their pockets this Christmas than last, the constant drip of economic challenges they’ve faced over the last two years has finally come home to roost.

“As we start a new year, cautious consumers are battening down the hatches and retailers can expect to see significant downward pressures on demand in the opening months of this year, which will ease off by spring if the economic conditions continue to improve and confidence slowly returns.”

The post ‘Cautious consumers are battening down the hatches’ despite Christmas spending first appeared on Neighbourhood Retailer.

The covid pandemic, the energy crisis and the broader inflationary situation have all taken their toll and the economic weather in the coming months may be turbulent.

The retail industry is Northern Ireland’s biggest employer and although Westminster and Stormont offered assistance in the form of furloughing and a business rate ‘holiday’, the collapse in footfall during the pandemic was very difficult for many retailers, including many Retail Consortium members.

The Retail Consortium represents the overwhelming majority of the retail trade in Northern Ireland by turnover, encompassing many high street names who provide everything from coffee to clothing, a lot of the larger retailers who sell products such as electrical goods, DIY items and gardening supplies, and virtually all the main supermarkets.

EXTRAORDINARY PERIOD

The covid pandemic was a truly extraordinary period which cost billions in lost retail sales and left retailers reeling with more debt and cash flow woes. Sadly, for many the pandemic was the final straw, with shops closing across the country.

Unfortunately, a brief window of post-covid economic optimism dissipated rapidly due to the conflict in Ukraine. The ensuing energy and commodity shock supercharged the costs crisis and compounded supply chain issues and bottlenecks caused by a world rebounding after the pandemic.

Twelve months ago shop price inflation was at 0.3%. Today, prices at the tills are soaring by 7.4%, an 18-year high.

‘It seems incredible that we are entering 2023, over six years after Brexit, without these fundamental trading arrangements properly resolved’

Other factors have challenged consumers and retailers. The NI Protocol has added extra costs and uncertainty, the political stalemate in Northern Ireland for the past 12 months and the political turbulence at a UK level last year have all combined to produce an extremely unsettled backdrop for retail operations.

It seems incredible that we are entering 2023, over six years after Brexit, without these fundamental trading arrangements properly resolved. It is equally incredible that we will soon be marking 12 months without an Executive in place – meaning the Assembly will have functioned properly for only one year in the last five years.

Nine months after the last remaining covid restrictions were removed Northern Ireland’s shopper footfall remains below pre-pandemic levels. Shop vacancies are substantially higher and retail sales have flatlined in real terms for the past six months. In recent weeks several well-known brands have faltered, whilst others have announced store closures, and that’s before the traditionally sticky period in late January and February when revenues usually dip and rent and rates bills need paid. The economic scarring of the pandemic and costs crunch will be with us for years.

RELIEF NEEDED

There have been bright spots. The Platinum Jubilee gave a timely boost to footfall. The re-opening of Primark in Bank Buildings and the opening of the new Ulster University campus in Belfast city centre have helped to drive up footfall in recent months,

Despite acknowledgement from government that businesses are facing their own “costs emergency”, there has been little by way of immediate relief for firms. UK Ministers aren’t hiking the business rate in England but in Northern Ireland the trajectory for business rates over the next few years is unclear, from an already high starting point compared to the rest of the UK.

In addition, the absence of a functioning local legislature at Stormont has meant that opportunities for change – such as changing the laws protecting shop workers from violence which have been modernised at Westminster and Holyrood, remain untouched here.

It’s been a year of profound ups and downs for retail in Northern Ireland. The industry is hoping for less of a white-knuckle ride over the coming 12 months. With the economy in difficulties, the outlook for demand uncertain, and unpredictability the new norm, prospects for the coming year look inauspicious. Retailers will again need to call on all the agility, and remarkable resilience they have displayed in recent times.

TO SEE THE FULL FEATURE IN THE 2023 NEIGHBOURHOOD RETAILER YEARBOOK AND MARKETING GUIDE, CLICK HERE

The post Resilience required by NI retailers first appeared on Neighbourhood Retailer.

The average increase in the rate set by the 11 councils across the province is 7.29%, with the highest increase set by Belfast City Council at 7.99% and the lowest set by Antrim and Newtownabbey Borough Council at 4.9%.

Mr Johnston said these rates will “not help businesses or consumers”.

“I am left asking myself ‘what did we do to deserve this?’ The average increase in the rate set by the 11 councils is 7.29%. That amounts to a significant increase in costs for our members,” he said.

“Costs pressure can lead to price increases, and we know that is the last thing that consumers want to see. This move by the councils will not help businesses or consumers.”

REGIONAL RATE

Mr Johnston added it was “hugely disappointing” that NI business rates had not been frozen for the coming year, as they have been in England, Scotland and Wales.

“Retail Consortium members have invested millions in, and employ hundreds of workers in all 11 councils,” he said.

“We can only hope that the Secretary of State, Chris Heaton-Harris MP will follow the example of his ministerial colleagues in England and not increase the regional rate element of our business rates. That really would add insult to injury.

“Recent times have been very difficult for retailers – with the covid pandemic, energy price shocks and general inflationary pressures. The continuation of a freeze on business rates in England, Scotland and Wales is a welcome recognition of the fact that trading conditions are still difficult.

“As I said it is hugely disappointing that the councils have not been able to freeze their part of business rates next year.”

It is anticipated that a regional rate will be struck by the UK Government ahead of bills being sent out in April.

The post Business rates increases ‘hugely disappointing’ – NI Retail Consortium first appeared on Neighbourhood Retailer.

Neil Johnston has appealed to Chris Heaton-Harris to hold off on imposing a further increase and has urged him to freeze them for 2023-2024.

“Northern Ireland already has the highest business rates in the UK and the NI Secretary of State mooted the possibility of a further increase for the coming year in a written parliamentary statement in late November,” said Mr Johnston.

“What do the Conservatives in London, Labour in Wales and the SNP in Scotland have in common? They all agree this is not the time to raise business rates. They have all decided to freeze business rates,” he added.

The Retail Consortium represents the overwhelming majority of the retail trade in Northern Ireland by turnover, encompassing many high street names who provide everything from coffee to clothing, a lot of the larger retailers and virtually all the main supermarkets.

DECISION NEEDED

Mr Johnston also revealed that he has written to the leaders of the five main political parties asking them to back a business rates freeze.

“We currently don’t have an Executive and that is why this decision has fallen to the Secretary of State, but the Retail Consortium think it is important that the local party leaders make their positions clear. The freeze in England, Scotland and Wales was announced towards the end of last year. We need a decision soon and I hope they will join our call to keep costs down.

“Given the current weak economic situation the last thing businesses, and consumers, need to see is business rates rising. It is essential that they are at the very least frozen for 2023/24. We have written to Chris Heaton-Harris appealing to him not to go down this road,” said Mr Johnston.

STRUGGLING

Mr Johnston maintained that retailers were still reeling from the pandemic, the energy price shock and the general inflationary situation and are ill placed to absorb any increases, especially as they strive to keep down shop prices for customers.

“Raising the business rate is a bad idea, not just because of the extra burden it would impose on retailers, but because ultimately consumers across Northern Ireland could face higher prices as a result. It is essential that we all work collaboratively to help everyone through this difficult period.

“Retailers are doing everything they can – not just to remain competitive in a difficult trading environment but to do what they can to protect consumers. We know that people are struggling.”

The post New Director of NIRC calls on Secretary of State to freeze business rates first appeared on Neighbourhood Retailer.