British retailers see inevitable price hikes as inflation spreads

Bloomberg

UK retailers raised their prices at the fastest pace in more than nine years in January, a survey showed, passing on soaring costs to consumers already grappling with a cost-of-living squeeze.
The report by the British Retail Consortium suggests inflation is spreading well beyond energy prices, with goods from food to furniture seeing prices driven higher in a month when stores traditionally offer new year discounts.
The findings indicate that a surge in prices that’s already putting pressure on the government and the central bank is about to get even worse. In a stark warning, the BRC said the strain on profit margins meant prices will almost certainly climb further in the coming months.
“Retailers are working hard to cut costs, but it would be impossible to protect consumers from any future rises,” said Helen Dickinson, chief executive of the lobby group. “As commodity prices, energy prices and transportation costs continue to rise, it is inevitable that retail prices will continue to follow in the future.”
The BRC said prices rose 1.5% from a year earlier, almost double the pace registered in December. Food-price inflation climbed to 2.7%, but the biggest push came from non-food stores where prices rose 0.9% after falling 0.2% in the previous month.
The report comes a day before the Bank of England is expected to raise interest rates. Inflation, already at a 30-year high, is expected to exceed 6% in April, triple the BOE target, just as a planned hike in payroll taxes and energy bills take effect.
NielsenIQ, which produces the figures with the BRC, said living costs are now the most important concern for almost half of all households.
“The surge in energy and travel costs is now impacting disposable incomes and is likely to dent consumer’s willingness to spend,” said Mike Watkins, head of retailer and business insight at NielsenIQ.
“Stores will need to encourage cash-strapped customers to keep shopping and despite the increase in shop prices, retailers are responding by keeping price increases as low possible for as long as possible.” The survey showed food prices continue to be pushed higher by poor harvests, labor shortages and rising global commodity prices.