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The prices of basic goods in U.K. stores are rising at the fastest pace for more than a decade and further increases are likely as firms pass on soaring costs to consumers, a business lobby warned.
In a survey published Wednesday, the British Retail Consortium said “there are limits to the costs that retailers can absorb” as it told consumers already facing a cost of living crisis to expect further pain.
“Inflation has increased since the start of the year and the underlying trend in shop prices will be upwards over the next few months,” said Mike Watkins, head of retailer and business Insight, NielsenIQ, which produces the figures with the BRC.
The BRC said prices rose 1.8% in February from a year earlier, up from 1.5% in January and the fastest pace since late 2011.
Food price-inflation remained at 2.7%, with fresh food driven up over the last year by poor harvests in the U.K. and globally. But the main push last month came from non-food stores, where price growth accelerated sharply to 1.3%. Furniture and health and beauty products saw particularly big increases.
The official consumer-price inflation rate, which includes services and covers a wider range of goods, is forecast to hit a 31-year high of over 7% in April -- more than three times the Bank of England's target -- when domestic energy prices are due to go up by a staggering 54%.
Higher payroll taxes and the prospect of more interest-rate increases from the BOE to tame inflation are adding to squeeze on pressure on disposable incomes, which may make consumers less willing to spend.
Helen Dickinson, chief executive of the the BRC, said stores were going to “great lengths” to support hard-pressed customers but that the combined impact of higher shipping and raw materials prices and labor shortages meant many had little option but to increase prices.
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