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Tight margins and upward price pressures on retailers mean that the cost of food is likely to go up as we head towards Christmas, according to the monthly British Retail Consortium (BRC)-NielsenIQ shop price index.
According to the monitor, food inflation accelerated to 0.5% in October, up from 0.1% in September. This is above the 12- and six-month average price growth rates of 0.1% and -0.1%, respectively and is the highest inflation rate since November 2020.
The BRC said three in five retailers expect prices to increase in the run up to Christmas, and the ongoing labour shortages are making the situation worse.
Following 10 months of deflation, fresh food prices rose by 0.3% in October compared to a fall of -0.4% in September. This is above the 12- and six-month average price growth rates of -0.7% and -0.6%, respectively, the BRC said.
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Meanwhile, non-food deflation was steady at 1% in October. This is a slower rate of decline than the 12- and six-month average price declines of 2.3% and 1.1%, respectively.
"While overall prices remain below their October 2020 levels, this is the third consecutive month of both food and non-food month-on-month rises," said Helen Dickinson OBE, CEO of the BRC.
"It is now clear that the increased costs from labour shortages, supply chain issues and rising commodity prices have started filtering through to the consumer."
Ambient food inflation was steady at 0.8% in October. This is below the 12- month average price increase of 1.2% and above the six-month average price increase of 0.6%.
"Retailers continue to do all they can ensure value for money for customers and are looking to work with government to find a long-term solution to these shortages, otherwise it is the British consumer, who already face higher energy bills this winter, who will suffer the consequences,” said Dickinson.
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