BRC: Budget costs spark long term inflationary worry

Responding to the latest CPI inflation figures, which show headline inflation rising to 2.3% and food inflation remaining unchanged at 1.9%, Kris Hamer, Director of Insight of the British Retail Consortium, said:

“Inflation rose in October to 2.3% due to the increase in the energy price cap at the start of the month, which meant rising energy bills for households. Food inflation stayed at 1.9%, although poor harvests have pushed up the price of some fresh items, such as fruit. In non-food, furniture items remain in deflation with consumers remaining cautious about the purchase of larger items, whilst clothing inflation edged up slightly - although we can expect this to fall as Black Friday sales roll out next month.

“The retail industry is bracing for £7 billion of additional costs in 2025 as a result of changes to Employers' National Insurance Contributions, an increase to the minimum wage and a new packaging levy. For an industry that already operates on slim margins, these new costs will inevitably lead to higher prices. There is also the risk of job losses and store closures if retailers attempt to limit the impact on their customers. If the government wants to prevent a return to high inflation, it needs to consider mitigating the impact of these costs on retailers. The Governor of the Bank of England yesterday warned that the increase in NICs present “one of the biggest uncertainties ahead.” To address these concerns, the government must consider phasing in the new National Insurance threshold, as well as revisiting the timelines of other costs such as the packaging levy.”

-ENDS-

Notes:

• ONS Consumer Price Index figures