UK shop prices rise faster in May as retailers warn over Iran war costs
British shop price inflation accelerates in May as supply disruption and higher energy costs linked to the Iran war add pressure on retailers. The increase comes as broader U.K. consumer inflation is expected to climb again in coming months because of the energy price shock.
Highlights
- British Retail Consortium reports shop prices in May up 1.2% year-on-year, accelerating from 1.0% in April, despite slowing food price inflation.
- Furniture and health and beauty products show the largest price rises, attributed to higher raw material and shipping costs amid ongoing supply pressures.
- The BRC urges government to cut non-commodity charges and red tape as consumer inflation, at 2.8% in April, may climb to 4% due to energy price shocks.
Retail price pressures build in May
According to Reuters, the British Retail Consortium's monthly survey of major retail chains shows shop prices in May are 1.2% higher than a year earlier, up from a 1.0% annual increase in April.Food price inflation slows to 2.7%, its lowest level in a year, from 3.1%. Furniture and health and beauty products record the biggest increases, reflecting higher raw material and shipping costs.
Helen Dickinson, chief executive of the BRC, says the government needs to do more to reduce operating costs for retailers as businesses face pressure from energy bills and supply disruption.
Government pressure and wider inflation outlook
Dickinson says cutting non-commodity charges, taxes and levies, which make up more than two-thirds of energy bills, as well as reducing red tape, would help keep inflation down. Her comments come as the government presses supermarkets to slow price increases and considers price caps this month.Britain's official consumer price inflation rate falls to 2.8% in April, but it is expected to rise again to around 4% in the coming months due to the energy price shock. That outlook suggests retailers and households are likely to remain under cost pressure even as food inflation eases.
Our earlier coverage of Tesco’s TSCO shares highlighted a period of rangebound trading as the retailer balanced positive corporate updates with cautious market momentum. We noted the launch of a lower-carbon Irish beef range, alongside management’s focus on stable cash flow and shareholder returns, while technical levels suggested consolidation unless the stock reclaimed nearby resistance.
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