The BRC warns that the trend of falling shop prices may soon end due to budget implications.
- A slight rise in shop price inflation has been recorded for the first time in 17 months this November.
- Retailers are facing increased costs due to changes in employer’s National Insurance Contributions.
- Increases in business rates, minimum wage, and new levies are expected to add £7bn in costs by 2025.
- BRC urges the government to reconsider the timeline for new tax levies to prevent further price rises.
The British Retail Consortium (BRC) has voiced concerns over the cessation of falling shop prices as the recent budget introduces significant cost implications for retailers. According to BRC data, shop prices fell by 0.6% in November, marking a shift in the steady decline experienced over the past 17 months.
Notably, the inflation rate, though still negative, saw a slight uptick from a 0.8% decrease last month. Non-food items remained under deflation, shifting to -1.8% in November from -2.1% in October, while food prices increased at a slower rate of 1.8%, up by 0.1 percentage point.
Retail leaders have expressed concerns about upcoming changes to employer National Insurance Contributions, expected to add millions to tax obligations. Over 70 retailers, including major names like Tesco and Sainsbury’s, have cautioned that these costs will contribute to rising inflation, stressing the difficulty of absorbing such expenses.
BRC chief executive Helen Dickinson highlighted the fragile state of the industry, stating, ‘November was the first time in 17 months that shop price inflation has been higher than the previous month, albeit remaining overall in negative territory.’
The industry faces compounded financial pressures, with £7 billion of additional costs anticipated by 2025. These derive from changes to employer contributions, increased business rates, minimum wage hikes, and a newly enacted packaging levy. Retailers, who typically operate on narrow profit margins, could see these costs translated to consumers, resulting in higher prices.
In response, the BRC has called on the government to adjust the timelines for the new packaging levy and to ensure business rate reforms offer substantial, timely relief to retailers. Such measures might alleviate the impending financial burden on the retail sector.
The BRC’s cautionary stance highlights the potential resurgence of inflation, urging swift governmental intervention to mitigate retailer cost burdens.
