Prices rising in all sectors – BRC-NielsenIQ

But it’s not just fresh food that is hitting record-high prices – shop prices across the board rose by their fastest rate in almost three years in the run-up to Christmas.

According to the latest report, prices rose by 0.8 per cent in December compared with a year ago and above the 0.3 per cent increase recorded in November. The increase was driven by a 2.4 per cent rise in food prices in December, compared with 1.1 per cent in November.

Mike Watkins, head of retailer and business insight, NielsenIQ said not only did prices rise, but they did so at a faster rate, especially in food. 

“Food prices were falling earlier on in 2021, but the acute labour shortages across supply chains, amongst other factors, led to the year ending with a notable increase; for example, fresh food saw the largest rate of inflation in almost a decade. Year-on-year non-food products were deflationary, but prices rose across the board on the previous month,” he said.

“The trajectory for consumer prices is very clear: they will continue to rise, and at a faster rate. Retailers can no longer absorb all the cost pressures arising from more expensive transportation, labour shortages, and rising commodity and global food prices.”

Mr Watkins said consumers will already be harder-pressed this year, with rising energy bills, the looming hike in national insurance, and more expensive mortgages. Government should relieve some of these costs by looking for long-term solutions for resolvable issues such as labour shortages.

“After a challenging Christmas period, consumers are facing higher energy, travel and for some mortgage costs and the underlying price inflation in retail may only make it more difficult to entice shoppers to spend in January. But it is weak consumer confidence and uncertainty around the pandemic rather than shop price inflation which will have the biggest impact on demand at the start of the year,” he said.