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Food inflation increased to 2.8% year-on-year in May, rising for the fourth consecutive month, driven by a surge in the cost of fresh food, according to the BRC-NIQ Shop Price Index.
It found that Fresh Food inflation increased to 2.4%, against growth of 1.8% in April. This is above the three-month average of 1.8% and was particularly driven by the cost of wholesale steak.
Meanwhile, Ambient Food inflation decreased to 3.3% year on year in May, against growth of 3.7% in April, below the three-month average of 3.6%.
Overall, shop price deflation was unchanged at 0.1% year on year in May, against a decline of 0.1% in April. This comes as Non-Food deflation decreased to 1.5% year on year in May, against a decline of 1.4% in April.
Commenting on the figures, Helen Dickinson, chief executive of the BRC, said: “While overall shop prices remain unchanged in May, food inflation rose for the fourth consecutive month. Fresh foods were the main driver, and red meat eaters may have noticed their steak got a little more expensive as wholesale beef prices increased.
“Non-food prices remained in deflation, but this slowed in categories such as fashion and furniture as retailers began to unwind heavy promotional activity. Prices were falling faster for electricals as retailers tried to encourage spending before any potential knock-on impact from U.S. tariffs.”
She added: “With retailers now absorbing the additional £5bn in costs from April’s increased Employer National Insurance contributions and National Living Wage, it is no surprise that inflation is rearing its head once again. Later this year, retailers face another £2bn in costs from the new packaging tax, and there are further employment costs on the horizon from the implementation of the Employment Rights Bill.
“Government must ensure the Employment Rights Bill is fit for purpose, supporting workers’ rights while protecting jobs and investment for growth. If statutory costs continue to rise for retailers, households will have to brace themselves for more difficult times ahead as prices rise faster.”
Mike Watkins, head of Retailer and Business Insight, NielsenIQ, said: “Whilst shoppers are seeing savings at the checkout as retailers increase promotional activity, increasing prices is still an extra challenge to consumer spending alongside rising household bills. And if consumer confidence remain weak as looks likely, then retailers may have to work harder to encourage shoppers to spend over the summer.”
