A retail lobby group has warned it will be “impossible” for the sector to shield shoppers from rising costs in the months ahead as till prices hit their highest level for almost 10 years.
The British Retail Consortium (BRC) said there was no let-up in sight for the price pressures facing the industry which, it added, had been working hard to cut costs to mitigate the impact.
It pointed to headwinds from many sources as its latest shop price index, compiled with NielsenIQ data, showed annual inflation at the shops jumping from 0.8% in December to 1.5% in January.
The report said it marked the highest rate since December 2012.
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Cost of living is ‘terrifying’
The upwards shift was driven by non-food inflation which accelerated to 0.9% in January compared to a fall of 0.2% in December, the BRC said.
Its chief executive, Helen Dickinson, explained: “In particular, furniture and flooring saw exceptionally high demand leading to increased prices as the rising oil costs made shipping more expensive.
“Food prices continue to rise, especially domestic produce which have been impacted by poor harvests, labour shortages, and rising global food prices.”
She added: “Many households will find it difficult to absorb the additional costs, as well as others on the horizon.
“Retailers are working hard to cut costs, but it would be impossible to protect consumers from any future rises.
“As commodity prices, energy prices and transportation costs continue to rise, it is inevitable that retail prices will continue to follow in the future.”
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Who’s to blame for soaring gas prices?
Separate data from Kantar Worldpanel on Tuesday warned that grocery shoppers face a £180 annual increase in average spending alone this year.
One big bill set to descend on households is the looming increase in the energy price cap – due to be revealed next week.
The energy industry has warned that without government intervention, the cap is set to rise by 50% to an average £2,000 per year from April – with a further hike due in October to account for surging wholesale gas costs last year.
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Pay rises wiped out by surging inflation
The Office for National Statistics reported this week that one-in-five homes were already cutting back on energy use amid warnings of a surge in fuel poverty ahead.
The Bank of England is widely tipped to raise interest rates, for the second consecutive month, on Thursday in a bid to cool expectations that wages must rise to keep pace with inflation – already at its highest level for almost 30 years.
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Mike Watkins, head of retailer and business insight at NielsenIQ, said: “The surge in energy and travel costs is now impacting disposable incomes and is likely to dent consumer’s willingness to spend.
“NielsenIQ research this month shows nearly a half of all households are saying that their most important concern at the moment is the rising cost of living.”