Food prices continue to climb as supermarkets pass on increased costs to UK consumers

Helen Cahill
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Prices have been rising on both fresh and non-fresh food products (Source: Getty)

Food prices continued climbing last month as supermarkets were forced to pass on the cost of sterling's devaluation to shoppers.

Grocery shop prices rose one per cent year-on-year in March, according to data from the British Retail Consortium (BRC) and Nielsen, building on a price rise of 0.8 per cent in January.

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Fresh food prices grew 0.9 per cent, and prices on shelf items were up 1.3 per cent, the steepest March increases for more than two years. Chief executive of the BRC, Helen Dickinson, said it was "impressive" supermarkets had not increased prices more dramatically, given how far sterling has fallen.

Mike Watkins, head of retailer and business insight at Nielsen, pointed out that food inflation was lower than overall inflation. In February, consumer price inflation (CPI) hit 2.3 per cent, up from 1.8 per cent in January, a faster increase than economists were expecting.

"And in the non-food channel there is still deflation," he said. "We anticipate this trend to continue over the next few months. If so, this would be good news for shoppers managing household budgets when prices are rising faster elsewhere."

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Overall shop prices fell by 0.8 per cent in March, driven by deflation on non-food items of two per cent. Prices in clothing and footwear slumped 5.9 per cent as fashion retailers continued to offer goods on sale as an inducement to shoppers. Furniture and floorcovering prices were also knocked, down by 2.6 per cent.

"Looking across both food and non-food, shop prices have been falling for 47 consecutive months," said Dickinson. "Other factors outside of retail shop prices continue to be the main drivers of CPI rising faster than expected, for the moment at least. The squeeze on household disposable incomes will tighten as the year progresses."

She said that a "smart Brexit" for consumers would require the maintenance of tariff-free trade.

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