Recent findings from the British Retail Consortium (BRC)-NIQ Shop Price Monitor indicate that rising prices of essential goods might limit consumers’ disposable income for non-essential purchases, such as clothing. This highlights the impact of rising prices on retail spending across the board.
The data reveals that non-food inflation, which encompasses clothing, registered at -0.8% year-on-year in August, a slight improvement from July’s -1.0% decrease. This uptick exceeds the three-month average of -1.0%.
This modest rise in non-food inflation is in stark contrast to the broader trend of shop price inflation, which increased to 0.9% year-on-year in August, climbing from 0.7% in July and surpassing the three-month average of 0.6%.
According to Mike Watkins, head of NIQ Retailer and Business Insight, the escalation in shop price inflation can be attributed to several factors, including “heightened global supply costs and seasonal food inflation,” both influenced further by weather conditions. Additionally, the end of promotional campaigns linked to recent sporting events and rising operational costs have also played a role in driving this trend, emphasizing the ongoing impact of rising prices on retail spending.
BRC Chief Executive Helen Dickinson commented: “Shop price inflation hit its highest rate since March last year, fueled by food price rises. This adds pressure to families already grappling with the cost of living. Staples such as butter and eggs saw significant increases due to high demand, tightening supply, and increased labour costs. There was some respite for parents ahead of the new academic year, with lower prices for clothing, books, stationery, and computing.”
Food inflation specifically rose to 4.2% year-on-year in August, up from 4.0% in July, and exceeded the three-month average of 3.9%.
Dickinson also pointed out the Bank of England’s recognition that the “£7 billion ($9.43 billion) in new costs stemming from last year’s budget has created an uphill battle for retailers.”
These findings come after 60 CEOs from major UK retail companies collectively wrote to the Chancellor, urging for actions to be taken ahead of the autumn budget.
“The planned business rates reforms present an opportunity to deliver a meaningful reduction in retail, hospitality, and leisure bills, ensure no shop pays more as a result, and help retailers keep prices low for customers,” Dickinson emphasized.
