Store prices soared in July by the most since at least 2005, as the cost of fresh food was boosted by rising rates for fertilizer, animal feed and transportation.
Prices rose 4.4% compared with July last year, a step up from a 3.1% year-on-year increase in June, according to the latest British Retail Consortium shop price index compiled with market research firm Nielsen IQ.
Fresh food inflation rose to 8% according to the index from 6.2% the previous month, the highest rate since March 2009. This contributed to overall food inflation of 7%.
Helen Dickinson, chief executive of the British Retail Consortium (BRC), a trade body representing most major retailers, said some of the biggest price rises were seen in dairy products such as lard, cooking fats and butter
He said: “Households and businesses should prepare for a difficult period as inflationary pressures hit home.”
“Rising production costs, from the price of animal feed and fertilizer to the availability of products, exacerbated by the war in Ukraine, together with exorbitant ground transportation costs, caused the prices of food would explode.”
The high rate of inflation for basic food staples is likely to hit low-income households hardest, increasing the pressure on those already hit by a cut in Universal Credit benefits and rising housing costs. ‘energy and gasoline.
A fifth of UK households now have an average shortfall of £60 a week between what they earn and what they need to cover essentials such as energy bills, rent, transport and food, as the rising cost of living leaves people with the lowest amount of cash in savings in almost five years, according to Asda Income Tracker data compiled by the Center for Business and Economic Research (Cber) this week .
Shoppers are switching to discount stores, abandoning brands in favor of supermarket own-label products and cutting back on luxuries such as subscription services and gambling as they try to stretch their budgets.
Food isn’t the only contributor to store price inflation.
Non-food prices rose 3% in July last year, according to BRC figures, as a result of rising shipping and production costs, partly caused by continued disruption in China due to the restrictions related to Covid.
Dickinson said: “As inflation reaches new heights, retailers are doing everything they can to absorb as much as possible of these rising costs and to seek efficiencies in their businesses and supply chain. With households suffering a cost of living crisis, retailers are expanding their value ranges to offer the widest variety of goods to those most in need, offering discounts to vulnerable groups and increasing staff pay.”