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Food prices in August rose at the fastest rate since 2008, says British Retail Consortium | Business News

Food prices rose at their fastest rate since 2008 in August – up 9.3% after a 7% increase last month.

The figure comes from the British Retail Consortium (BRC) and NielsenIQ index, which blamed the Ukraine war and its effect on the price of animal feed, fertiliser, wheat, and vegetable oils.

Fresh food prices were 10.5% higher than last August, up from the 8% annual increase recorded in July, with products such as milk and margarine seeing the biggest rises.

Shop price annual inflation also increased to 5.1% in August, up from 4.4% in July, and is now the highest since 2005 when the BRC index started.

The rise in food prices is one of the key drivers of inflation, which hit 10.1% in the 12 months to July, up from 9.4% in June, according to the Office for National Statistics (ONS).

Some analysts believe it could exceed 18% next year, when more huge energy price rises are set to kick in.

BRC chief executive Helen Dickinson said the outlook was “bleak for both consumers and retailers”, but that businesses would support people through “discounts to vulnerable groups, expanding value ranges, fixing prices of essentials, and raising staff pay”.

But she said mounting costs meant “there is only so much they can shoulder”.

“The new prime minister will have an opportunity to relieve some of the cost burden bearing down on retailers, like the upcoming increase in business rates, in order to help retailers do more to help their customers,” added Ms Dickinson.

Data earlier this month showed workers had suffered a record real-term wage slump, prompting millions of public sector employees to vote for what could be the biggest wave of strike action since the 1970s.

Mike Watkins, head of retailer and business insight at NielsenIQ, said: “Inflation continues to accelerate and shoppers are already cautious about how much they spend on groceries, with a fall in volume sales at supermarkets in recent months.

“We can expect this level of food inflation to be with us for at least another six months but hopefully some of the input cost pressures in the supply chain will eventually start to ease.

“However, with further falls in disposable incomes coming this autumn as energy costs rocket again, retail spend will come under pressure in the all-important final quarter of the year.”

Cost of living: Retail sales recover slightly in July with 0.3% rise but but long-term decline persists | Business News

UK retail sales rose in July but the longer-term downward trend in consumer spending shows no sign of abating, official data shows.

Sales increased by 0.3% in July, which was much higher than economists’ forecasts of a 0.2% drop, according to the Office for National Statistics.

But sales fell by 1.2% in the three months to July when compared with the previous period, continuing the decline since last summer.

Sales are 3.4% lower than last July in further evidence that people are tightening their belts in the face of the cost-of-living crisis.

A revision of June’s retail figures also put sales slightly lower, with a 0.2% drop rather than 0.1%, in a sign that shopping activity was slower than previously thought, the ONS reported.

ONS director of economic statistics Darren Morgan said: “Retail sales nudged up very slightly in July, but looking at the longer-term picture, they are continuing the downward trend which started last summer.

“Online sales did pick up this month, as retailers told us that sales were boosted by a range of offers and promotions.

“However, fuel sales fell with some evidence suggesting the very hot weather meant fewer people travelling.

“Clothing and household goods sales declined again, with feedback continuing to indicate consumers are cutting back due to increased prices and concerns around affordability and cost of living.”

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What is driving the inflation spike?

Read more:
How everyday items have risen in price in the past 12 months
Three things that need to happen for prices to return to normal

It comes as new research indicated consumer confidence is at an all-time low in light of “acute concerns” about the soaring cost of living and bleak economic outlook.

The Bank of England has warned that escalating inflation is likely to tip the UK into recession later this year.

The Consumer Prices Index (CPI) soared to 10.1% in the 12 months to July, up from 9.4% in June and remaining at the highest level since February 1982, driven by an increase in food prices on top of previous sharp rises in household energy bills.

Retail sales boosted by warm weather but inflation worries loom | Business News

The summer heatwave prompted shoppers to spend more on summer clothes, picnic food and air conditioning in July, according to the latest figures.

The British Retail Consortium said the value of total sales was 2.3% higher last month than it was in July 2021 – good news for retailers after falls in each of the previous three months.

Like-for-like sales were up 1.6% after four months of falls.

But the figures are not adjusted for inflation and the consortium said they represented a fall in volume terms.

Inflation hit a 40-year high of 9.4% in June, and July’s figures will be revealed later this month.

Helen Dickinson, chief executive of the BRC, said that, with inflation over 9%, many retailers were still contending with falling sales volumes during what “remains an incredibly difficult trading period”.

“Consumer confidence remains weak, and the rise in interest rates coupled with talk of recession will do little to improve the situation,” she added.

Overall sales of non-food items, such as homeware, declined by 2% in the latest quarter.

Read more:
UK economy to be in recession for more than a year, Bank of England warns as it hikes rates
Two indicators slowdown already under way after Bank of England warns of 15-month recession

Sales of non-food products from stores were up 2% in the three-month period, but online sales were down 3.9%, reversing the trend seen during the COVID-19 lockdowns.

Paul Martin, UK head of retail at KPMG, said: “The summer could be the lull before the storm with conditions set to get tougher as consumers arrive back from summer breaks to holiday credit card bills, another energy price hike and rising interest rates.

“With stronger cost-of-living headwinds on the horizon, consumers will have to prioritise essentials, and discretionary product spending will come under pressure.”

Consumer spending was up 7.7% in July compared to a year earlier, figures from Barclaycard showed, boosted by sales of clothing, beauty products and staycations.

But it also included a 44% leap in spending on utilities and a 30% leap in fuel.

Households are cutting back on overseas travel and dining out but Barclaycard said that its survey showed confidence in household finances.

Some 66% of survey respondents said they felt confident about their household finances, compared to 59% in June.

Jose Carvalho, head of consumer products at Barclaycard, said: “This shows that, faced with difficult circumstances, many are finding ways to budget and manage their finances successfully, to cope with ongoing inflationary pressures.”