According to the British Retail Consortium (BRC), food inflation has reached its highest level in nearly a year and is expected to continue rising. In April, food costs saw a 2.6% annual increase, the highest since May last year, up from 2.4% the previous month.
The BRC warned of further price hikes due to rising costs, with the sector facing £7bn in tax increases this year following last October’s budget. However, industry figures suggest that a supermarket price war is helping to cushion immediate impacts on shoppers.
Kantar Worldpanel reported that spending on promotions reached its peak this year, accounting for almost 30% of total sales in the four weeks leading up to 20 April. Price cuts, particularly through loyalty cards, helped consumers take advantage of Easter holiday deals at Tesco and Sainsbury’s.
Despite this, overall grocery inflation rose to 3.8%. Non-food goods saw weaker inflation rates, with shop price inflation at -0.1% over the 12 months to April, largely driven by discounts.
However, retailers are struggling to absorb the rising costs. BRC’s chief executive, Helen Dickinson, stated that the days of shop price deflation are limited, as food inflation hits an 11-month high and non-food deflation eases. Essential items like bread, meat, and fish have seen price increases, coinciding with new employment costs for retailers.
