Inflation in UK shops hits record high of 8.9% with more pain to come

Food price increases hit 15 per cent in March, as fruit and vegetables fell into short supply. EPA-EFE

LONDON - Prices in British stores rose at the highest rate on record in March, in a sign that the cost-of-living crisis is far from over.

The British Retail Consortium (BRC) said shop price inflation accelerated to 8.9 per cent, a fresh peak for an index that started in 2005, and an increase from 8.4 per cent in February.

Food price increases hit 15 per cent, as fruit and vegetables fell into short supply.

The data comes as broader British inflation rose unexpectedly in February for the first time in four months, led by food and drink prices.

Shoppers are visiting discount grocers Aldi and Lidl to try to make their money go further, as well as putting fewer items in their baskets.

“Shop price inflation has yet to peak,” said Ms Helen Dickinson, chief executive officer at the BRC.

“Food price rises will likely ease in the coming months, particularly as we enter the UK growing season, but wider inflation is expected to remain high.”

Prices rose particularly sharply in March for chocolate, sweets and fizzy drinks due to the rising cost of sugar.

Fruit and vegetables also became more expensive after weak supplies of tomatoes, cucumbers and peppers from Spain and North Africa led to gaps on shelves.

Imports grew pricey due to the weakening pound.

Energy bills remain elevated despite government support, putting extra pressure on consumers.

British shoppers are already expecting their personal finances to deteriorate over the next year under the weight of rising prices.

The Bank of England raised rates last week, predicting the British economy will avoid a recession for now.

It said in February that inflation should fall below 4 per cent by the end of the year, but many Britons remain worried.

A survey by Deltapoll conducted in the last week showed that, on average, people expect inflation of 9.4 per cent a year from now.

Customers are already shopping “little and more often” for their groceries as they shrink their basket sizes to cope with constrained budgets, said Mr Mike Watkins, head of retailer and business insight at NielsenIQ, which produces the data for the BRC.

Some retailers are offering discounts and promotions to encourage people to spend at Easter, he said. BLOOMBERG

Join ST's Telegram channel and get the latest breaking news delivered to you.