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U.K. retailers warned that a surge in food prices will keep inflation rising in the months ahead as the world adapts to supply-chain bottlenecks holding up the flow of goods across borders.
The British Retail Consortium said shop price inflation accelerated to 2.7% from a year ago in April, the most since 2011 and up from 2.1% in March. The cost of food rose 3.5%, and there was a broad increase in the price of other goods ranging from furniture to electrical products and books.
A separate survey of manufacturers, carried out by the Confederation of British Industry, showed the sharpest drop in optimism in the three months to April since the onset of the pandemic, as costs and prices both saw the biggest jump since the survey began in 1988.
“Customers should brace themselves for further price rises,” Helen Dickinson, chief executive officer of the BRC, said in a statement. “Global food prices have reached record highs. They will place further upward pressure on U.K. food prices in coming months.”
The figures will add to alarm over rising prices and a tightening squeeze on consumer spending power. The Bank of England on Thursday is expected to increase interest rates for a fourth time since December to curb inflation, and Prime Minister Boris Johnson's government is looking for ways to blunt a cost-of-living squeeze.
The BRC said disruption at the port of Shanghai due to a severe coronavirus lockdown is holding up the flow of goods and that the war in Ukraine is upsetting food supply chains. It also noted that competition between supermarkets has helped hold down the price of fresh food, but other products are rising in cost.
“Inflation shows no signs of abating, and the increase in non-food prices is an extra challenge for the high street,” said Mike Watkins, head of retailer and business insight at NielsenIQ.
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