Shop prices have returned to inflation for the first time in almost a year, marking a significant shift in the retail landscape. Overall shop prices were 0.4% higher in June than a year earlier, representing a substantial jump from the 0.1% decline seen in May.
The figures from the British Retail Consortium (BRC)-NIQ Shop Price Index reveal mounting pressure on household budgets across Britain. Food inflation has accelerated sharply, increasing to 3.7% from May's 2.8%.
Food costs surge higher
Fresh food prices climbed 3.2% compared to a year ago, with meat prices particularly affected by high wholesale costs and more expensive labour. Fruit and vegetable prices have also risen due to hot, dry weather reducing harvest yields across the country.
Non-food goods remained in deflation at 1.2% cheaper than last June, though this represents a smaller decline than May's 1.5% drop. Retailers have been cutting prices on DIY and gardening items to attract customers.
Budget impact becomes clear
BRC chief executive Helen Dickinson warned that the autumn Budget's impact is now becoming apparent. "Within three months of the costs imposed by last autumn's budget kicking in, headline shop prices have returned to inflation for the first time in close to a year," she said.
Retailers have been warning of higher prices since the Government's autumn Budget introduced significant increases to employer National Insurance costs and the National Living Wage. Dickinson noted that the organisation had "predicted a significant rise in food inflation by the end of this year, and this has been accelerated by geopolitical tensions and impacts of climate change."
Economic pressures mount
Mike Watkins, head of retailer and business insight at NielsenIQ, highlighted broader economic factors driving the price increases. "Price increases are being driven by broader economic conditions and ongoing changes in the supply chain," he said.
Despite current good weather boosting demand at many retailers, Watkins cautioned that "rising prices could become a concern if consumer willingness to spend declines later in the year."
(PA/London) Note: This article has been edited with the help of Artificial Intelligence.
