Prices in UK stores rose at the highest rate on record this month in a sign that the cost-of-living crisis is far from over.
(Bloomberg) — Prices in UK stores rose at the highest rate on record this month in a sign that the cost-of-living crisis is far from over.
The British Retail Consortium said shop price inflation accelerated to 8.9%, a fresh peak for an index that started in 2005, and an increase from 8.4% in February. Food price increases hit 15%, as fruit and vegetables fell into short supply.
The data comes as broader UK inflation rose unexpectedly in February for the first time in four months, led by food and drink prices. Shoppers are visiting discount grocers Aldi and Lidl to try to make their money go further, as well as putting fewer items in their baskets.
“Shop price inflation has yet to peak,” said Helen Dickinson, chief executive officer at the BRC. “Food price rises will likely ease in the coming months, particularly as we enter the UK growing season, but wider inflation is expected to remain high.”
Prices rose particularly sharply in March for chocolate, sweets and fizzy drinks due to the rising cost of sugar. Fruit and vegetables also became more expensive after weak supplies of tomatoes, cucumbers and peppers from Spain and north Africa led to gaps on shelves. Imports grew pricey due to the weakening pound.
Read More: Breakfast Index Reaches New High After UK Food Shortages
Energy bills remain elevated despite government support, putting extra pressure on consumers. UK shoppers are already expecting their personal finances to deteriorate over the next year under the weight of rising prices.
The Bank of England raised rates last week, predicting the UK economy will avoid a recession for now. It said last month that inflation should fall below 4% by the end of the year, but many Britons remain worried. A survey by Deltapoll conducted in the last week showed that, on average, people expect inflation of 9.4% a year from now.
Customers are already shopping “little and more often” for their groceries as they shrink their basket sizes to cope with constrained budgets, said Mike Watkins, head of retailer and business insight at NielsenIQ, which produces the data for the BRC. Some retailers are offering discounts and promotions to encourage people to spend at Easter, he said.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.