UK shoppers face rising prices in the run-up to Christmas after the cost of goods increased for the third month running, the British Retail Consortium said.
Total food prices rose 0.4% in October from a month earlier compared with a 0.1% month-on-month increase in September, the BRC/NielsenIQ shop price index showed. Overall prices remained below the level of a year earlier but the annual rate of decline reduced.
Food prices rose 0.5% in October from the previous month and non-food prices increased by 0.3%. Food inflation rose sharply from 0.2% in September and non-food price growth accelerated from 0.1%.
Fresh food prices rose for the first time in 10 months and non-food prices were affected by rising costs caused by shortages and supply constraints that hit products such as furniture.
Price increases have been fuelled by the rising cost of commodities, component shortages, bottlenecks at ports and a shortage of lorry drivers. The BRC said 60% of retailers surveyed expected prices to increase as Christmas approaches.
Helen Dickinson, the BRC’s chief executive, said: “This is the third consecutive month of both food and non-food month-on-month rises. The increased costs from labour shortages, supply chain issues and rising commodity prices have started filtering through to the consumer. Tight margins mean retailers may not be able to absorb all of these new costs, so prices will continue to rise.”
Britain’s retailers face a bumpy peak trading period in the next two months. On Tuesday a CBI survey showed product shortages in UK stores had reached a level not seen for 35 years. Consumer confidence has also been hit by fuel shortages, rising prices and more Covid-19 cases.
Mike Watkins, head of retailer and business insight at NielsenIQ, said: “With consumer sentiment now more cautious we cannot ignore that availability issues are still top of mind. So consumers will be uncertain about when and where to spend and with Christmas promotions about to kick in, competition will intensify in both food and non-food retailing.”
