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Shop price inflation at highest rate since 2011

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Written by: Emma Lunn
30/03/2022
Shop price annual inflation rose to 2.1% in March, up from 1.8% in February, according to the BRC-NielsenIQ Shop Price Index.

The rate is the highest rate since September 2011 – and there could be worse to come.

Food inflation jumped to 3.3% in March, its highest rate since March 2013. Non-food inflation rose to 1.5%, up from 1.3% in February and its top rate since February 2011.

The increases are the fifth consecutive month of rising prices due to mounting cost pressures throughout the supply chain, including rising wages, input costs, global commodity prices, energy, and transport.

Many of these costs are beginning to be exacerbated by the situation in Ukraine, but the full impact on prices is yet to be seen. Wheat prices have risen sharply, while the rise in oil prices has not only impacted domestic energy costs, but also the costs of fertiliser and transporting goods.

Helen Dickinson OBE, chief executive of the British Retail Consortium, said: “Our Shop Price Index has been rising more modestly than other inflation measures as retailers were able to limit price rises on many essential goods.

“By keeping the prices of key items down and expanding value ranges, retailers are trying to support customers most affected by the cost-of-living squeeze, many of whom will face higher energy prices and National Insurance Contributions from 1 April. With overall inflation likely to rise even higher according to the Bank of England, consumers will not have an easy ride this year. The war in Ukraine, and volatility in commodity markets is likely to further dampen consumer confidence in the coming months.

Asda announced earlier this week that it planned to roll out its ‘Just Essentials’ range this summer, claiming it will be the largest value range in the market.

Mike Watkins, head of retailer and business insight at NielsenIQ, said: “With cost-of-living increases accelerating, the next few months will be a difficult time for consumers.

“Rising food prices will start to impact what’s put in the shopping basket so supermarkets will need to adapt ranges to help shoppers manage what they spend on their weekly groceries. Whilst high street retailers will be competing for discretionary spend that’s coming under increasing pressure.”

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