hop prices hit their highest inflation rate in nearly 14 years as businesses grappled with rising supply chain costs and a decline in household spending, figures show.
Retail prices were 3.1% higher than a year ago in June, from 2.8% in May – the highest inflation rate since September 2008, according to the BRC-NielsenIQ Retail Price Index.
Food inflation rose to 5.6% in June, from 4.3% in May, driven by fresh food prices 6.2% higher than June last year – the highest inflation rate since May 2009.
Last month, households and businesses were hit by the highest inflation rate since the 1980s
The figures follow the Office for National Statistics which reported that inflation as measured by the consumer price index rose from 9% in April to 9.1% last month, at a level unknown since February 1982, amid record prices for petroleum and the rising cost of food.
Helen Dickinson, CEO of the British Retail Consortium (BRC), said: “Last month, households and businesses were hit by the highest inflation rate since the 1980s, as near-record commodity prices in energy, transport and food were filtered by the supply chain.
“Food prices have risen sharply, especially for fresh foods such as cheese, which has been affected by the rising cost of fertilizers and animal feed.
“As households face the biggest real income reduction since at least the 1970s and businesses struggle with upstream supply chain costs, retailers remain focused on protecting their customers.
“Fierce competition means that retailers will continue to absorb as much of this cost pressure as possible and seek efficiencies in their businesses. Supermarkets are also expanding their value ranges to offer a greater choice for customers who deal and offer discounts to vulnerable groups.
As inflation accelerates due to rising energy, travel and now food costs, buyers are now more likely to reduce outdoor consumption, shop on a fixed budget … and look for retailers where prices are lowest
“Retailers are working to find more ways to protect their customers from the worst effects of inflation, but if costs continue to spiral, the government may need to find ways to help small businesses support their customers.”
Mike Watkins, Head of Retail and Business Insights at NielsenIQ, said: “While the fast-moving consumer goods industry is more isolated from any downturn in consumer spending, food retail is not immune.
“As inflation accelerates due to rising energy, travel and now food costs, buyers are now more likely to reduce their consumption outside the home, buy according to a fixed budget, switch to cheaper private labels and look for retailers where prices is the lowest. ”