The end of declining retail prices might be approaching, spurred by increased costs following recent fiscal announcements.
- November witnessed a reduction in price deflation for the first time in 17 months, indicating an inflationary trend.
- The impending rise in costs includes changes to employers’ National Insurance Contributions and other financial impositions.
- Retailers are vigorously cautioning about the inevitable inflation due to these unabsorbed additional expenses.
- Industry leaders urge government to reconsider timelines to avoid passing costs to consumers.
Shop prices experienced a 0.6% decline in November, a decrease from the 0.8% deflation recorded in October, according to the latest data. This statistical change marks the first instance in 17 months where the reduction in prices was less pronounced, hinting at potential inflation.
Non-food items continued to show a deflation rate of -1.8% in November, a slight increase from the -2.1% seen in October. Meanwhile, the rise in food prices experienced a modest slowdown, adjusting by 0.1 percentage point to 1.8%.
The British Retail Consortium (BRC) has foreseen an upward trajectory in inflation, driven by significant cost pressures including changes to National Insurance Contributions expected in April. Such adjustments are projected to add millions to tax bills for retailers.
Retail giants, including renowned names like Tesco, Sainsbury’s, Next, Amazon, and Boots, have collectively voiced their concerns in communications with policymakers. They emphasized that the magnitude of new expenses would unavoidably contribute to inflation as businesses find it impossible to absorb these costs wholly.
Helen Dickinson, BRC’s chief executive, highlighted essential financial burdens facing the industry. She pinpointed the cumulative impact of £7 billion in additional costs expected by 2025 from changes in National Insurance, business rates, wage increases, and a new packaging levy. Dickinson stressed the industry’s slim margins, warning of inevitable price increases unless governmental fiscal policy timelines are amended.
Retailers face a challenging environment with imminent cost increases likely to influence inflation, urging policy reconsiderations.
