Shop prices hit new records as retail calls for business rates freeze

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Shop prices hit record highs in September as retailers looked ahead to the next business rates revaluation with trepidation.

Inflation accelerated to 5.7% in September, up from 5.1% in August. This marked another record month for shop price inflation, according to the BRC-NielsenIQ Shop Price Index.

Food inflation accelerated to 10.6% in September, up from 9.3% the previous month, representing the highest rate of food inflation on record.

Fresh food inflation surged to 12.1% in the period, up from 10.5% in August – also the highest rate of inflation for the category on record.

Meanwhile, ambient food inflation hit 8.6% in September – the fastest rate of increase in the category ever.

Non-food inflation also jumped, up 3.3% in the period compared with 2.9% in August.

British Retail Consortium (BRC) chief executive Helen Dickinson said the sector was in desperate need of government intervention to freeze business rates ahead of next year’s revaluation in April.

“With costs mounting across the board, September saw shop price inflation hit yet another high,” she said.

“The war in Ukraine continued to drive up the price of animal feed, fertiliser and vegetable oil, causing fresh food inflation to rise significantly over the past few months, particularly for products such as margarine,” said Dickinson.

“While the summer drought diminished some harvests, other produce benefited from the prolonged sunshine, helping to bring down prices for fruits such as strawberries, blueberries and tomatoes.

“Non-food inflation also rose, largely driven by DIY, gardening and hardware products, which, as heavier items, have been harder hit by rising transport costs.

“Retailers are battling huge cost pressures from the weak pound, rising energy bills and global commodity prices, high transport costs, a tight labour market and the cumulative burden of government-imposed costs.

“And, with business rates set to jump by 10% next April, squeezed retailers face an additional £800m in unaffordable tax rises. Government must urgently freeze the business rates multiplier to give retailers more scope to do more to help households.”

NielsenIQ head of retailer and business insight Mike Watkins added: “With food and household energy prices continuing to rise, it’s no surprise that NielsenIQ data shows that 76% of consumers are saying they expect to be moderately or severely affected by the cost-of-living crisis over the next three months, up from 57% in the summer.

“So households will be looking for savings to help manage their personal finances this autumn and we expect shoppers to become more cautious about discretionary spend, adding to pressure in the retail sector.”