Shop price inflation pushed up by non-food price rises

Shop price inflation increased by 0.8% year-on-year in May, with non-food inflation also increasing by 0.2%, according to the latest figures from the BRC and Nielsen.

The BRC said the growth in May was the second highest inflation rate seen in the last six years, though it remains “well below” headline inflation.

The price rises in some non-food categories, such as furniture and health and beauty, follow years of “deep discounting”, while other areas, such as electrical and clothing, have seen greater technological disruption and more intense competition, putting downwards pressure on prices.

Helen Dickinson, CEO of the BRC, said: “Rising costs associated with currency depreciation, stockpiling, rising minimum wage and the apprenticeship levy, have all put upwards pressure on prices for a while, and it now appears that retailers cannot absorb them any longer.

“Therefore, if the Government does not address future cost rises, including spiralling business rates, we may see larger price rises in the future.”

Mike Watkins, head of retailer and business Insight, Nielsen, added: “Whilst there are still cost price increases coming through the supply chain, food inflation remains lower than CPI and supermarkets continue to offer price reductions, in particular on seasonal food and drink, which is helping to offset other cost of living increases.

“Inflation has returned to non food but consumers remain cautious and there is intense competition on the high street. With non food retailers facing uncertain levels of demand, price discounting could quickly return if demand weakens over the next few months.”

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