UK shop prices rise at fastest pace since February 2024

[LONDON] Prices at British retailers rose at the fastest pace since February 2024 this month as food costs continued to increase rapidly and a decline for non-food items appeared close to an end, industry data showed on Tuesday.

Overall shop prices in September were 1.4 per cent higher than a year earlier, up from a 0.9 per cent inflation rate in August, the British Retail Consortium said, potentially adding to Britain’s broader inflation problem.

Food price growth remained at 4.2 per cent while non-food prices dropped by 0.1 per cent, a smaller annual decline than the 0.8 per cent fall recorded in August.

“Households are finding shopping increasingly expensive,” BRC chief executive Helen Dickinson said. “The impact on retailers and their supply chain of both global factors and higher national insurance and wage costs is playing out in prices for consumers.”

Finance minister Rachel Reeves announced an increase in employers’ mandatory social security contributions in her annual budget last year, drawing widespread complaints from retailers.

The BRC urged Reeves to avoid fresh levies that would push up prices in her next budget in November.

The Bank of England forecasts that the broader consumer prices index – which covers a wider range of goods and services than the BRC measure – will rise to 4 per cent this month, up from 3.8 per cent in August and double the central bank’s target.

Policymakers are divided about whether a slowing jobs market is enough to ensure inflation will return to target, or if they need to slow or stop their cuts to interest rates.

BoE Deputy Governor Dave Ramsden said on Monday that food prices seemed to be having an outsize effect on public perceptions of inflation, especially since a surge in 2022.

Dairy and beef prices appeared most affected by farms’ rising energy and labour costs, while a new government levy on packaging would push up prices in October, the BRC said. REUTERS