Shop prices edge up after year-long fall, food costs climb – BRC

(Alliance News) - UK shop prices rose in June for the first time in almost a year, pushed up by higher food costs and mounting pressure from government-imposed expenses, the British Retail Consortium said.

According to the latest BRC-NielsenIQ shop price index, overall shop price inflation hit 0.4% in June, reversing a 0.1% decline in May and marking the highest reading since July 2023.

This was above the three-month average of 0.1%.

Food inflation accelerated to 3.7% from 2.8% in May, led by higher prices for fresh and ambient products. Fresh food inflation climbed to 3.2% from 2.4%, while ambient food inflation rose to 4.3% from 3.3%.

In contrast, non-food items remained in deflation, with prices down 1.2% on the year, though this was a smaller decline than the 1.5% fall in May.

BRC Chief Executive Helen Dickinson said retailers are beginning to pass on the costs introduced in the autumn 2024 budget, including rises in employer National Insurance and the National Living Wage.

"Within three months of the costs imposed by last autumn's budget kicking in, headline shop prices have returned to inflation for the first time in close to a year," Dickinson said.

She warned that continued upward pressure on food prices was being driven by both labour and climate-related challenges.

"Food inflation showed little sign of slowing down, particularly in fresh produce, where prices of meat have been impacted by high wholesale prices and more expensive labour costs," she said. "Meanwhile, fruit and vegetable prices increased due to the hot, dry weather reducing harvest yields."

Dickinson urged the government to use the upcoming business rates reform to ease pressure on retailers: "The government must ensure no shop pays more as a result of the changes."

NielsenIQ's Mike Watkins noted that broader economic and supply chain factors were also at play, adding: "Rising prices could become a concern if consumer willingness to spend declines later in the year." He said retailers are likely to "reinforce their value-for-money messages over the summer."

The BRC-NIQ shop price index covers the period from June 1 to June 7.

By Eva Castanedo, Alliance News reporter

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