UK shop prices jump at the fastest pace in almost 14 years

·Finance Reporter, Yahoo Finance UK
·2 min read
UK shop prices A employee arranges produce inside a Sainsbury’s supermarket in Richmond, west London, Britain, June 27, 2022. Picture taken June 27, 2022. REUTERS/Henry Nicholls
UK shop prices: Food inflation jumped to 5.6% in June. Photo: Henry Nicholls/Reuters

Shop prices have hit their highest rate of inflation since 2008 this month, driven by the rapidly rising cost of food and soaring supply chain costs.

The British Retail Consortium (BRC) said that average prices among its members in early June were 3.1% higher than a year earlier, the fastest price increase pace in 14 years and higher than May’s 2.8% rise.

Food inflation jumped to 5.6% in June, up from 4.3% in May, driven by fresh food prices up 6.2% on June last year – the highest inflation rate since May 2009.

The BRC’s chief executive, Helen Dickinson, said: “Last month households and businesses were hit by the highest rate of inflation since the 1980s as near-record commodity prices in energy, transport and food filtered through the supply chain.

Read more: Shoppers giving up on organic and healthy foods to cope with cost of living, study shows

“Food prices rose sharply, particularly for fresh foods such as cheese which has been affected by the spiralling costs of fertiliser and animal feed.”

The figures follow the Office for National Statistics reporting that inflation as measured by the consumer prices index rose from 9% in April to 9.1% last month, a level unseen since February 1982, amid record prices for petrol and the soaring cost of food.

Inflation in the UK is at record high levels
Inflation in the UK is at record high levels

Dickinson added: “As households face the biggest real terms cut in income since at least the 1970s and businesses grapple with upstream supply chain costs, retailers remain focused on protecting their customers.

“Fierce competition means that retailers will continue to absorb as much of these costs pressures as possible and look for efficiencies in their businesses. Supermarkets are also expanding their value ranges to offer a wider choice for customers trading down and providing discounts to vulnerable groups.

The Bank of England is watching for signs that Britain's inflation jump leads to persistent inflation pressures and it has said it will act forcefully if that happens.

Read more: UK retail sales fall as price rises force people to cut food shopping

Mike Watkins, head of retailer and business insight at NielsenIQ, said: “Whilst the fast-moving consumer goods industry is more insulated from any downturn in consumer expenditure, food retailing is not immune.

“As inflation accelerates due to rising energy, travel and now food costs, shoppers are now more likely to cut down on out of home consumption, shop to a fixed budget, switch to cheaper private labels and seek out retailers where prices are the lowest.”

Watch: Cost of living: Food inflation to accelerate over summer and prices to stay high