Prices in UK shops climbed at the highest rate since 2005 this month, as consumers shouldered the soaring cost of items such as crisps, milk and margarine.
The British Retail Consortium (BRC) said shop price inflation rose to 5.1 per cent in August, a new record for the index, which launched in 2005.
The figure was up from 4.4 per cent in July.
Food price increases reached 9.3 per cent, with milk, margarine and crisps posting the biggest gains, as producers passed on increases in the cost of fertiliser, wheat and vegetable oils driven by the conflict in Ukraine.
The level of food inflation could continue for at least another six months, according to NielsenIQ, which produces the data for the consortium.
Britons are facing soaring energy bills, while bracing for a recession that could last more than a year, as the Conservatives prepare to choose the country’s next prime minister next week.
“As retailers also grapple with growing cost pressures, there is only so much they can shoulder,” said Helen Dickinson, chief executive of the BRC.
“The new prime minister will have an opportunity to relieve some of the cost burden bearing down on retailers, like the upcoming increase in business rates, in order to help retailers do more to help their customers.”
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Increasing shop prices are fuelling wider UK inflation, which some analysts predict could hit 22.4 per cent next year if energy prices continue to climb.
Monday’s bank holiday brought some respite, with customer traffic across all retail destinations rising by about 5 per cent compared with the weekend before, according to data company Springboard. Restaurants recorded an 8 per cent increase in transactions, as Britons enjoyed dining out with friends and family, Barclaycard data shows.
But prices are the biggest concern for 70 per cent of businesses, and confidence among companies has declined to the lowest level since March 2021, according to a report released by Lloyds Banking Group.
“With inflationary pressures growing, businesses will no doubt be looking to their supply networks along with tight control of costs and profit margins where they can,” said Paul Gordon, managing director for small and medium sized enterprises and mid corporates at Lloyds.
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Mike Watkins, head of retailer and business insight at NielsenIQ, said: “Inflation continues to accelerate and shoppers are already cautious about how much they spend on groceries, with a fall in volume sales at supermarkets in recent months.
“We can expect this level of food inflation to be with us for at least another six months, but hopefully some of the input cost pressures in the supply chain will eventually start to ease.
“However, with further falls in disposable incomes coming this autumn as energy costs rocket again, retail spend will come under pressure in the all-important final quarter of the year.”