As the coronavirus pandemic hit global supply chains, limited staff availability and pushed up inflation for shoppers made UK retailers increase their prices for the first time in more than two years in November, according to a survey revealed on Wednesday.
With the Bank of England due to consider this month a first interest rate hike since the COVID-19 crisis broke, the British Retail Consortium said shop prices rose by 0.3 percent compared with November 2020, the first annual increase since May 2019.
“The impact of labour shortages, rising commodity prices, and transportation costs have now very clearly taken their hold on consumer prices,” BRC chief executive Helen Dickinson said.
The increase was driven by a 1.1 per cent rise in food prices while non-food prices fell by 0.1 percent, less than October’s 1.0 percent decline, according to the survey which was conducted from Nov. 1-5.
Dickinson said she expected the rate of inflation would accelerate over the coming months.
Mike Watkins, head of retailer insight at NielsenIQ, which produces the data along with the BRC, said four in 10 households felt that their spending was constrained because of the rising cost of living.
The BRC’s shop price index covers a narrower range of spending than the consumer price inflation targeted by the Bank of England. CPI jumped to 4.2 percent in the 12 months to October, the biggest increase in 10 years.
The BoE surprised many investors when it did not raise Bank Rate from its pandemic emergency low of 0.1 percent on Nov. 4. Bets in financial markets of a hike on Dec. 16, after the BoE’s December meeting, have been scaled back in recent days because of the emergence of the Omicron variant of the coronavirus.
