The British Retail Consortium (BRC) has issued a caution regarding the potential cessation of decreasing shop prices due to rising costs.
- Data indicates a slight reduction in deflation rates for shop prices in November, marking the first increase in 17 months.
- Forecasts suggest new costs from National Insurance changes and other levies could pressure retail prices upward.
- Over 70 leading retailers have expressed concerns about absorbing upcoming cost hikes without increasing prices.
- Helen Dickinson of the BRC emphasizes the need for careful government reconsideration of upcoming tax and levy timelines.
The British Retail Consortium (BRC) has raised a cautionary note, indicating that the period of falling shop prices may soon draw to a close. This warning follows announcements in the recent Budget, which suggests that retailers will face increased operational costs.
According to data from the BRC and NIQ, shop prices saw a slight reduction in deflation, decreasing by 0.6% in November, a shift from a 0.8% deflation in October. This represents the first instance in 17 months where the deflation rate has been lower than the previous month, hinting at potential upcoming changes in price trends.
Retail leaders have expressed concerns regarding the impact of recent changes to employers’ National Insurance Contributions set for implementation in April. These changes are expected to add millions to their tax liabilities. Additionally, increases in business rates, the minimum wage, and a new packaging levy are anticipated to collectively introduce £7 billion in additional costs by 2025.
A coalition of over 70 retailers, including major names like Tesco, Sainsbury’s, Next, Amazon, and Boots, have communicated their apprehensions to the government. In a letter to Reeves, they cautioned that the magnitude of these cost increases would likely trigger inflation, given the challenges in absorbing such expenses without passing costs onto consumers.
BRC Chief Executive Helen Dickinson explained the situation, stating, “November was the first time in 17 months that shop price inflation has been higher than the previous month, albeit remaining overall in negative territory.” She added that significant price pressures are looming, and if the government wishes to avert a rise in prices, it must reassess the timelines for the new packaging levy and consider facilitating reductions in business rates.
The BRC underscores the urgency of government action to manage impending retail cost pressures and stabilise consumer prices.
