Price rises warning as shop inflation edges up

Year-on-year shop price inflation inched up to 1.2% in the month. That was above the 1% recorded in April and the three-month average of 1.1%, the BRC-NIQ Shop Price Monitor showed.

In non-food, inflation increased to 0.5% year on year in May, compared to a decline of 0.1% in April and above the three-month average of 0.1%.

However food inflation moderated to 2.7% compared to 3.1% in April and below the three-month average of 3.1%.

BRC chief executive Helen Dickinson said: “Furniture and health and beauty saw the sharpest increases, driven by rising raw material and shipping costs. Customers were still able to find bargains, with prices for TVs and audiovisual equipment falling as retailers help people get World Cup-ready.

“Households did benefit from food inflation falling to its lowest level in a year, as intense competition among supermarkets continued to deliver value and savings.

“While retailers work hard to keep prices down for customers, they continue to face significant cost pressures, including higher energy bills and disruption linked to the conflict in Iran. Businesses cannot absorb these costs indefinitely, which risks pushing prices higher in the months ahead.

“To help protect households, the government should take action to reduce business costs. Reducing the non-commodity charges, taxes and levies that make up more than two-thirds of energy bills, and cutting red tape would help keep inflation down.”

NIQ head of retailer and business insight Mike Watkins said: “Food inflation is still around the same level as a year ago, helped by supermarkets maintaining promotions after Easter, but prices are now starting to creep up for non-food after a period of deflation.

“With external inflationary pressure building and many households cautious about spending, we can expect promotions across all of retail to increase over the summer months.”