Shop prices soar in May but inflation to ‘get worse before it gets better’

The rate of shop price inflation was 2.8% in May, up from 2.7% reported in April, according to the latest BRC-Nielsen shop price index, marking the highest rate of inflation since July 2011.

This was well above both the 12- and six-month average price increases of 0.7% and 1.9%, respectively.

Food prices rose to the highest rate of inflation since April 2012, up 4.3% in May from 3.4% the previous month.

Fresh food inflation, in particular, hit its highest rate in a decade, driven by soaring import costs – this accelerated in May to 4.5%, up from 3.4% in April.

Ambient food also soared, up by 4%, an increase of 3.5% from the previous month.

Non-food prices, meanwhile, stayed close to the highest rates since records began in 2006, accelerating 2% in May, but decelerating slightly from 2.2% in April.

BRC chief executive Helen Dickinson said: “Retail prices edged up further as commodity, energy and transport costs continued to climb. Fresh food inflation hit its highest rate in a decade, with items like poultry and margarine seeing some of the largest increases due to soaring costs of animal feed and near-record global food prices.

“Retailers have been working hard to protect their customers from these rising costs, particularly at a time when households are being impacted by a huge rise in household energy bills.

“It is likely to get worse before it gets better for consumers with prices continuing to rise and a further jump in energy costs coming in October. With little sign that the cost burden on retailers will ease any time soon, they will be left with little room for manoeuvre, especially those whose supply chains are affected by lockdowns in China and the war in Ukraine.

“While many people will welcome the government’s latest announcement of support, uncertainty in the future of energy prices means they may only provide temporary respite.”

NielsenIQ head of retailer and business insight Mike Watkins added: “The acceleration in food inflation reflects the fact that retailers can no longer absorb the full extent of increased supply chain costs now hitting the industry.

“Promotions remain close to an all-time low and price cuts rather than volume-based offers such as multibuy are now the best way for retailers to help their shoppers manage their household budgets.”