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?