Shop prices see biggest rise in two years

Food prices are up, thus overall shop prices are up. Which might explain those shooting pains we've been feeling in our wallets...

by Emma Haslett
Last Updated: 06 Nov 2012
If you’ve ever considered taking a smallholding and embarking on a Good Life-esque self-sustainable lifestyle, now might be the time to do it. Because, according to new figures from the British Retail Consortium, food prices went up again last month, pushing shop price inflation up to its highest rate for more than two and a half years. In fact, prices rose by 2.9% year on year, while food prices jumped by 5.7% – their highest increase since October 2008. Anyone fancy gruel for lunch?

The figures also showed that in June, overall prices were 0.5% higher than May, with food prices up by 0.6%. And the worst part, according to the BRC, is that it’s down to a combination of factors – a weak pound, higher VAT and rising world commodity prices – that retailers can’t do much about.

Well, actually, there is one thing retailers can do about it: discount. And according to the BRC, they’re doing it with alacrity: apparently, 39% of spending on groceries now goes on discounted items, while many retailers (M&S, for one) have decided to start their sales two weeks earlier this year. And according to BRC director-general Stephen Robertson, ‘savvy shoppers are taking advantage to minimise the impact on real-life bills’.

It’s an interesting point, particularly in the context of comments by Asda chief financial officer Judith McKenna last week. She said Asda feels a responsibility to ‘hold back inflation for our consumers’ by discounting and finding other ways to make savings, which it can then pass on to its customers. But this is all well and good for a big company like Asda or M&S, which has more capacity to absorb the hit to its bottom line associated with starting sales early or cutting prices. For smaller retailers – your local grocer, for example – that may not always an option. In fact, it could make it even harder for them to compete. Not a very cheery thought, is it?

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