Price rises to pick up speed in 2022
Annual shop prices rose 0.8% in December, up from 0.3% in November, with labour shortages and the increasing cost of transportation cited as key factors that will continue to drive up shop prices in 2022.
Yearly non-food price deflation accelerated to 0.2% in December, compared to the decline of 0.1% in November, marking a slower rate of decline than the 12 and six-month average price declines of 1.7% and 0.9%, respectively, according to the latest figures from the BRC-NielsenIQ Shop Price Index.
Food inflation jumped 2.4% in December, up from 1.1% in November, above the 12 and six-month average price growth rates of 0.3% and 0.6%, respectively. That was the highest inflation rate since March 2019.
Helen Dickinson, Chief Executive of the British Retail Consortium (BRC), 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. 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.”
Mike Watkins, Head of Retailer and Business Insight at Nielsen IQ, added: “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.”