Rising food prices helped drive up inflation to 2.3% last month – its highest level for three-and-a-half years
The level reached in February – outstripping the Bank of England’s 2% target – came after food prices registered their first annual increase for more than two-and-a-half years.
The gradual and much-publicised increase in the cost of food has grabbed attention, given that supermarkets have long been engaged in price wars.
But, since the Brexit vote, the focus has shifted away from racing the competition to the bottom, and towards mitigating currency headwinds and the growing cost of commodities, such as fuel.
Still, the grocers aren’t likely to be the biggest victims here.
If food and fuel prices continue to rise and drive inflation above 3%, the biggest losers may be the big-ticket retailers.
Households that move to tighten the purse strings will still need to buy food. They may not, however, rush out to spend money on new electricals, home improvement or furniture.
For the meantime, if today’s ScS results are anything to go by, the furniture category appears stable, as evidenced by the half-year sales lift ScS unveiled today.
Its boss David Knight did acknowledge that February brought softer footfall, in line with Springboard’s monthly monitor showing a steeper than expected drop in shopper numbers at retail parks.
He doesn’t blame Brexit or consumer confidence for this wobble though – he instead puts it down to February’s “exceptionally nice” weather.
Quote of the day
”Footfall is only one element. Our conversion has improved and our average order price has improved, so we certainly won’t be rushing off trying to open smaller units on high streets or anything else.
“We will be sticking with what we are doing and continuing to make sure that people who do visit retail parks get great service and value.”
– ScS chief executive, David Knight, speaking to Retail Week after its interim results
Today in numbers
The number of new jobs that may be created as The Range builds new headquarters
The number of Phone Shops Sainsbury’s is closing
Look out tomorrow for full-year results from B&Q and Screwfix owner Kingfisher.
Emily Hardy, senior reporter