UK retailers report prices rising at sharpest pace since 2005

PRICES in UK shops accelerated at the sharpest pace since at least 2005, stretching consumers' spending power even further.

The British Retail Consortium (BRC) said its measure of inflation increased to 4.4 per cent in July from 3.1 per cent from last month, the highest since its survey first started. Supply chain disruptions and rising production and shipping costs, combined with the Ukraine crisis to push up prices.

The findings add to the challenge for the Bank of England, which has raised interest rates to 1.25 per cent to rein in inflation. It also feeds into an argument between the 2 contenders to succeed Boris Johnson as prime minister, with Liz Truss and Rishi Sunak debating how to help consumers.

"Consumers' household budgets are coming under increasing strain, and shelf price increases in both food and non-food have accelerated," said Mike Watkins, head of retailer and business insight at NielsenIQ, which aided in the research. "The grocery industry, in particular, is under intense pressure as retailers try to shield customers from the full impact of inflation."

The BRC said food inflation rose 7 per cent from a year ago, steeper than the 5.6 per cent increase in June and marking the biggest leap since 2009. Non-food inflation soared 3 per cent.

"Some of the biggest rises were seen in dairy, products, including lard, cooking fats and butter," said Helen Dickinson, chief executive officer of the BRC. "Non-food prices were hit by rising shipping prices, production costs and continued disruption in China." BLOOMBERG