Figures released today by the BRC (British Retail Consortium) show UK retailers raised their prices this month by the most since September 2011.
The news comes just two days before the lifting of the energy price cap, which is expected to lead to an average 54% increase in household fuel bills.
TREND CHANGE
Until October last year, shop prices had been on a downward trend as retailers competed with one another for sales.
However, March marks the fifth consecutive month of increases with prices up by 2.1% compared with a 1.8% rise in February and a rise of just 0.3% in November.
Shop prices have risen less dramatically than other inflation measures as retailers have tried to limit increases in essential goods to try and support customers.
The official consumer price index jumped from 5.5% in January to 6.2% in February, the biggest monthly jump since 2009.
Yet this was before the huge spike in energy prices spurred by Russia’s invasion of Ukraine, which has sent inflation close to double digit levels in parts of Europe.
FALLING CONFIDENCE
The latest UK consumer confidence survey from research firm GfK shows sentiment nosedived for the fourth month in a row in March as the looming cost-of-living crisis coincided with the war in Ukraine.
The overall confidence index dropped to -31 from -26 in February and -16 in March last year, while the personal finance outlook reading dropped to -18 from -14 a month ago and +10 a year ago.
The major purchase index, which reflects consumers’ appetite to spend on big-ticket items such as furniture and electrical goods, slid to -24 from -15 in February and -10 a year ago.
GfK’s client strategy director Joe Staton said: ‘A wall of worry is confronting consumers this month and there is an unmistakable sense of crisis in our numbers.
‘Consumers across the UK are experiencing the impact of soaring living costs with 30-year-high levels of inflation, record-high fuel and food prices, a recent interest-rate hike and the prospect of more increases to come, and higher taxation too - all against a background of stagnant pay rises that cannot compensate for the financial duress.’
SALES SET TO SLOW
In the BRC's February commentary on the retail market, chief executive Helen Dickinson warned that sales of discretionary items in particular were likely to suffer in coming months.
‘The future is looking increasingly uncertain, with current demand unlikely to be sustained. Consumer confidence, falling in recent months, will likely tumble further against the backdrop of the current geopolitical events.
‘The cost of living will continue to spiral due to global inflation, increasing energy bills and the rise in national insurance this spring. With households facing lower disposable income, discretionary spend will be one of the first things to feel the squeeze.’
