UK non-food shop prices rose in January
UK shoppers are likely to start voting with their wallets as shop price inflation accelerates and non-food prices in particular rise. Non-food prices were higher in January, even though it was the traditional clearance sale month.
The British Retail Consortium said on Wednesday that during January, UK shoppers were faced with the biggest increase in prices in more than nine years.
The BRC said prices in the shops rose by 1.5% overall last month compared to January 2021, with an increase that large having not been seen since December 2012.
Its monthly report came just a day before the Bank of England’s monetary policy committee meets, a meeting at which it’s widely expected to decide that interest rates must rise again. This will add further pressure on the disposable incomes of those with mortgages and credit card debts, as well as increasing the cost of borrowing for companies.
Food prices rising by 2.7% led the charge higher last month and the fact that non-food prices also rose by 0.9% meant that consumers were faced with a dilemma. If they had to make a choice between buying essentials like food at higher prices or non-essentials like fashion at higher prices, it's clear what many of them will pick.
That also presents a dilemma for companies whose costs have risen and who need to pass on those costs to stay afloat. We’ve already heard from a number of big and small names across the fashion price scale saying that they'll be raising their retail prices in order to deal with the higher costs that they themselves are facing.
That means prices are going up in some cases by as little as 3% or 4%, but in others they're rising in double-digits. Overall inflation reached 5.4% in December and has been predicted to reach as high as 6% at some point this year.
“The surge in energy and travel costs is now impacting disposable incomes and is likely to dent consumers' willingness to spend,” said Mike Watkins, head of retailer and business insight at NielsenIQ, which produces the data along with the BRC.
NielsenIQ’s research also showed almost 50% of households feel that the rising cost of living is their key concern.
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