Shop Prices Hold Steady, Food Costs Rise—Retailers Brace for More “Nice” Bills
In a nutshell: the shop price wheel has stalled at 0.1% deflation in May, mirroring April’s dip. But when we look under the kitchen hood, food inflation is running up—fresh produce and meats are nudging higher, while the non‑food side is still skating in mild deflation.
Numbers in a Nutshell
- Shop price deflation: +0.1% year‑on‑year in May (same as April) – the 3‑month average sits at –0.0%.
- Non‑food deflation: +1.5% Y/Y in May (up from –1.4% in April) – 3‑month average is –1.6%.
- Food inflation: +2.8% Y/Y in May (up vs. 2.6% in April) – 3‑month average: 2.6%.
- Fresh food prices: +2.4% Y/Y in May (up from 1.8% in April) – 3‑month average: 1.8%.
- Ambient food: ‑3.3% Y/Y in May (down from 3.7% in April) – 3‑month average: 3.6%.
CEO Says “Hold Your Breath”
Helen Dickinson, BRC Chief Executive admits the landscape is a mixed bag:
“While overall shop prices stay flat, food inflation’s been on the up‑trend for the fourth month straight. Fresh foods are the big drivers, and if you’re a steak lover, you might notice those cuts have a bit of a price tag”.
She points out that retailers are pushing through the £5bn extra cost from April’s new Employer National Insurance and National Living Wage hikes. “No shock, just inflation breathing back in,” she chuckles.
More Pounding on the Retail Budget
- Upcoming £2bn packaging tax later this year.
- Possible add‑ons from the Employment Rights Bill.
Helen calls for a responsible government touch that keeps jobs safe but also stops “price‑dragging” from sucking in consumers.
NielsenIQ’s Thought on War‑Time Shoppers
Mike Watkins, Head of Retailer and Business Insight, talks shop‑with‑savings “mask” and the challenge of balancing cuts with rising bills.
“Shoppers can still see savings at the register due to promotion push, but every increase feels like a weight on the wallet”.
He warns that weak confidence could push retailers to upcase the summer push harder to keep the spending flowing.
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