BRC warns government any further tax rises will ‘keep shop prices higher for longer’

The warning ahead of the autumn Budget scheduled for November 26 comes as shop price inflation increased 1.4% year on year in September, according to the latest BRC Shop Price Monitor.

Food inflation was unchanged at 4.2% year on year for the period, flat month-on-month with August, but above the three-month average of 4.1%.

Fresh flood inflation as unchanged at 4.1% year on year, as was ambient food inflation which was unchanged at 4.2% for the period.

Chief executive Helen Dickinson said that customers are beginning to find shopping increasingly expensive and warned the government that the decisions it makes in the coming weeks and months could worsen that.

“A year and a half of non-food deflation looks set to come to an end, as inflationary pressures spread beyond food. DIY and gardening saw rising prices, while some back-to-school categories continued to see reductions as retailers offered promotions on electricals such as laptops ahead of the new academic year. Food inflation held steady after seven consecutive months of rises but increased labour and energy costs continue to push up input prices for many farmers, particularly of cattle, with dairy and beef prices remaining high.

“Households are finding shopping increasingly expensive. The impact on retailers and their supply chain of both global factors and higher national insurance and wage costs is playing out in prices for consumers. The new packaging tax, set to take effect in October, will put further upward pressure on inflation. While retailers continue to absorb higher costs as much as possible and deliver value to customers, any further tax rises in the upcoming Budget would keep shop prices higher for longer. Ultimately, it is British households who will bear the consequences – positive or negative – of the chancellor’s decisions.”

NIQ head of retailer and business insight Mike Watkins said: “With inflationary pressures persisting, many shoppers remain concerned about their personal finances and are becoming increasingly price-sensitive. As a result, retailers are likely to continue offering promotions and deals in the coming weeks to help maintain sales momentum.”