British shop price inflation accelerated in May as retailers faced higher energy bills and disruption linked to the Iran conflict, according to data released by the British Retail Consortium on Tuesday.
The retail industry group said annual shop price inflation rose to 1.2% in May, up from 1.0% in April.
The reading also stood above the three-month average of 1.1%.
The increase came as furniture and health and beauty products recorded some of the strongest price rises, reflecting higher raw material and shipping costs.
At the same time, food price inflation eased to 2.7% year-on-year in May from 3.1% in April.
The figure marked the lowest level recorded in a year and came in below the three-month average of 3.1%.
Non-food prices return to growth
According to the survey, non-food inflation rose 0.5% year-on-year in May, compared with a 0.1% decline in April.
The figure was also above the three-month average of 0.1%.
Fresh food inflation slowed to 3.4% in May from 3.9% a month earlier, while ambient food inflation eased to 1.6% from 2.1%.
Every month, overall shop prices increased 0.5% in May.
Food prices declined 0.1% month-on-month, while non-food prices rose 0.8%.
Helen Dickinson, Chief Executive of the BRC, said shop price inflation increased mainly because of rising non-food costs.
“Shop price inflation edged up in May as non-food prices rose.
Furniture and health & beauty saw the sharpest increases, driven by rising raw material and shipping costs,” Dickinson said.
She added that some products still saw price declines as retailers continued to offer promotions and discounts to consumers.
“Customers were still able to find bargains, with prices for TVs and audiovisual equipment falling as retailers help people get World Cup ready. Households did benefit from food inflation falling to its lowest level in a year, as intense competition among supermarkets continued to deliver value and savings,” Dickinson said.
Retailers urge government support
The BRC also urged the UK government to take measures aimed at reducing business costs as retailers continued to face pressure from higher energy prices and geopolitical disruptions.
Dickinson said retailers could not continue absorbing higher costs indefinitely.
“While retailers work hard to keep prices down for customers, they continue to face significant cost pressures, including higher energy bills and disruption linked to the conflict in Iran. Businesses cannot absorb these costs indefinitely, which risks pushing prices higher in the months ahead,” she said.
She added that government intervention on energy-related charges and regulation could help contain inflation.
“Reducing the non-commodity charges, taxes, and levies that make up more than two-thirds of energy bills, and cutting red tape would help keep inflation down,” Dickinson said.
The latest data comes as Britain’s broader consumer price inflation rate fell to 2.8% in April.
However, inflation is expected to rise again in the coming months because of the energy price shock.
Promotions expected through the summer
Mike Watkins, Head of Retailer and Business Insight at NIQ, said food inflation remained close to year-ago levels as supermarkets maintained promotional activity after Easter.
“Food inflation is still around the same level as a year ago, helped by supermarkets maintaining promotions after Easter, but prices are now starting to creep up for non-food after a period of deflation,” Watkins said.
He added that retailers were likely to continue offering promotions during the summer as consumers remained cautious with spending.
“With external inflationary pressure building and many households cautious about spending, we can expect promotions across all of retail to increase over the summer months,” Watkins said.
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