Shop prices rise as wheat and cotton soar
Soaring commodity prices helped push shop price inflation to its highest level since January, new data from the British Retail Consortium (BRC) shows.
Overall shop price inflation increased to 2.2% in October from 1.9% in September. Food inflation increased to 4.4% in October from 4.0% in September. Non-food inflation increased to 1.1% from 0.7% in September.
BRC director general Stephen Robertson said that retailers were currently shielding customers from the full impact of commodity price rises.
‘Wheat is up 47% compared with a year ago, affecting the price of staples such as bread - and some meat products, as feed costs work their way up the supply chain,’ he said.
‘Cotton has risen 90% over the last 12 months yet inflation in the non-food sector continues to be low, indeed allowing for the VAT rise since this time last year it's actually negative.’
However, retailers’ reluctance to pass on higher commodity prices may be short-lived. High street fashion chain Next said today that it will raise its prices by 8% early next year due to soaring cotton prices.
Next and other retailers may be unlikely to lift prices before Christmas though.
‘Weak consumer confidence and a sluggish housing market mean retailers are competing even more fiercely for the limited discretionary spending available,’ said Robertson.
‘That situation is unlikely to change in the run up to Christmas, with retailers clamouring to win the attention of cash-strapped consumers through discounting and promotions.’