Food price inflation rose in April to its highest rate in 11 months as retailers were hit by a “mountain” of rising employment costs.
Food inflation in April hit 2.6% year on year, up from 2.4% in March, as everyday essentials such as bread, meat and fish all increased in price, according to the BRC.
Overall shop prices remained in deflation, but only just, at –0.1%. It’s a change from both the March figure and the three-month average of –0.4%.
Deflation was also slowing in non-food, to –1.4% in April, compared with –1.9% in March and a three-month average of –1.8%, according to the latest BRC-NIQ Shop Price Index.
BRC CEO Helen Dickinson said shop prices overall would soon enter inflation, and pointed to the “mountain” of new costs for retailers in recent rises in employers’ National Insurance and the national living wage.
“The days of shop price deflation look numbered as food inflation rose to its highest in 11 months, and non-food deflation eased significantly,” said Dickinson.
“Everyday essentials including bread, meat, and fish all increased prices on the month. This comes in the same month retailers face a mountain of new employment costs in the form of higher employer National Insurance contributions and an increased national living wage.
“Despite price competition heating up, retailers are unable to absorb the total impact of these £5bn of employment costs and the additional £2bn costs when the new packaging tax comes into effect in October. It is crucial that poor implementation of the upcoming Employment Rights Bill does not add further pressure to costs – pushing prices further up, and job numbers further down.”
Fresh food inflation increased to 1.8% in April, compared with 1.4% in March and a three-month average of 1.5%.
Ambient food inflation was 3.7% in April, unchanged since March but above the three-month average of 3.4%.
Mike Watkins, head of retailer and business insight at NIQ, said: “Shoppers continue to benefit from lower shop price inflation than a year ago, but prices are slowly rising across supply chains, so retailers will be looking at ways to mitigate this as far as possible.
“And whilst we expect consumers to remain cautious on discretionary spend, the late Easter will have helped to stimulate sales.”
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