Inflation in UK stores hits highest rate on record

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(Bloomberg) – Prices in UK stores rose at the fastest pace since at least 2005 this month as Britons battled soaring costs on everything from petrol to crisps.

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The British Retail Consortium said retail store price inflation accelerated to 5.1% in August, a new high for the index which was launched in 2005, and up from 4.4% in July. Food price increases reached 9.3%, with milk, margarine and crisps registering the highest increases. This level of food inflation could continue for at least another six months, according to NielsenIQ, which produces the BRC data.

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Shoppers are doing everything they can to save money at checkout, including switching to discount supermarkets, choosing own-brand products and buying less food. Britons brace for a recession potentially lasting more than a year and soaring energy bills as a leadership race unfolds to decide who will succeed Boris Johnson as Prime Minister next week .

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« While retailers are also grappling with mounting cost pressures, they cannot afford all they can afford, » said BRC chief executive Helen Dickinson. « The new Prime Minister will have the opportunity to ease some of the cost burden on retailers, such as the upcoming trade tariff increase, to help retailers do more to help their customers. »

Food bills rise as UK inflation hits highest level since 2008

Rising shop prices are playing into broader inflation in the UK, which some analysts believe could top 22% in 2023, the BRC said.

In a rare boost for stores, the recent UK bank holiday weekend brought some respite with shopper traffic across all retail destinations up around 5% on the weekend previous, according to data firm Springboard. Restaurants saw an 8% increase in transactions as Britons enjoyed dining out with friends and family, Barclaycard data shows.

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Still, price hikes remain the biggest concern for 70% of businesses as business confidence fell to its lowest level since March 2021, according to another report released Wednesday by Lloyds Banking Group Plc. The outlook for UK retailers fell 18 points from July, registering the biggest decline among the four sectors surveyed by the bank.

“With rising inflationary pressures, companies will no doubt turn to their supply networks as well as tight control of costs and profit margins where they can,” said Paul Gordon, managing director of SMEs and medium-sized companies at Lloyds. « We know that rising costs are already taking a toll on businesses, but staying nimble in the face of the changing economic environment will be vital for businesses in the months ahead. »