2023.03.2808:24:00UTC+00UK Shop Price Inflation Hits Fresh Record High: BRC

UK shop prices logged another record increase in March due to the historical growth in food and non-food prices, data from the British Retail Consortium showed Tuesday.

The BRC- NielsenIQ shop price index increased 8.9 percent on a yearly basis in March, faster than the 8.4 percent rise in February.

The annual growth was primarily driven by another record 15.0 percent growth in food prices. Non-food prices also posted a record gain of 5.9 percent.

Despite hitting a new record high, the BRC cautioned that shop price inflation has yet to peak.

"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," BRC Chief Executive Helen Dickinson said.

Dickinson noted that the rising cost of sugar coupled with high manufacturing costs lifted prices of chocolates and sweets in March. Fruit and vegetable prices also increased as poor harvests in Europe and North Africa worsened availability, and imports became expensive due to the weakening pound.

Inflation continues to have an impact on the spending power and increased energy bills from April will add more pressure on households, Mike Watkins, head of retailer and business insight at NielsenIQ, said.

In February, consumer price inflation accelerated to 10.4 percent from 10.1 percent in January. Headline inflation had peaked at 11.1 percent in October 2022 to mark the highest level since 1981.

Last week, the Bank of England had raised its benchmark rate by 25 basis points to 4.25 percent, which was the highest since 2008. The bank rate was lifted by 415 basis points over the current tightening cycle that began in December 2021.