The MIA’s Membership with the British Retail Consortium gives us access to an expanded portfolio of unbiased research and analysis to share with our members. Today, we’re providing key macroeconomic data from the UK economy, focusing on the issue on everybody’s minds: inflation.
Inflation hits new high… Again
Headline Statistics:
- Shop Price annual inflation accelerated to 5.1% in August, up from 4.4% in July. This is above the 3-month average rate of 4.1%. This marks a new record for shop price inflation since this index started in 2005.
- Food inflation accelerated strongly to 9.3% in August, up from 7.0% in July. This is above the 3-month average rate of 7.2%. This is the highest inflation rate since August 2008.
- Non-Food inflation decelerated to 2.9% in August, down from 3.0% in July. This is above the 3-month average rate of 2.6%. Inflation remains near the series’ high in this category.
- Fresh Food inflation strongly accelerated in August to 10.5%, up from 8.0% in July. This is above the 3-month average rate of 8.1%. This is the highest inflation rate since September 2008.
- Ambient Food inflation accelerated to 7.8% in August, up from 5.7% in July. This is above the 3-month average rate of 6.0%. This is the fastest rate of increase since March 2009.
Commentary:
Helen Dickinson OBE, Chief Executive, British Retail Consortium:
“Mounting cost pressures up and down supply chains meant shop price inflation hit a new high in August. The war in Ukraine, and consequent rise in the price of animal feed, fertiliser, wheat and vegetable oils continued to push up food prices. Fresh food inflation in particular, surged to its highest level since 2008, and products such as milk, margarine and crisps saw the biggest rises.”
“The rise in shop prices is playing into wider UK inflation, which some analysts are predicting could top 18% in 2023. The situation is bleak for both consumers and retailers, but retail businesses will remain committed to supporting their customers through offering discounts to vulnerable groups, expanding value ranges, fixing prices of essentials, and raising staff pay. However, as retailers also grapple with growing cost pressures, there is only so much they can shoulder. The new Prime Minister will have an opportunity to relieve some of the cost burden bearing down on retailers, like the upcoming increase in business rates, in order to help retailers to more to help their customers.”
Download the full report here
Economic Briefing: UK set for long-lasting recession
- GDP fell by 0.6% in June, following growth of 0.4% in May. Services were the main contributor to the fall in the most recent reporting period, as Test and Trace activity as well as vaccinations tailed off, hampering output. Output in consumer-facing, activities, however, remained flat, pulled down by retail trade though pulled up by restaurants and pubs.
- Inflation remains at its highest since April 1983 with the Consumer Price Index hitting 10.1%, which is close to 3% below where the Bank of England see it peaking in 2022 Q4.
- In July, BRC-KPMG’s retail sales grew by 2.3% year-on-year, following June’s contraction in sales of -1.0%.
- The UK’s economic inactivity rate was estimated at 21.4%, unchanged from the previous quarter, and 1.2 percentage points higher than before the coronavirus pandemic.
“The UK is projected to enter a recession by the end of the year, according to the Bank of England’s latest set of economic forecasts. With wholesale gas prices registering almost daily records, inflationary pressures are yet to see their peak…
The prices of many key commodities such as oil and fertiliser do however appear to be on their way down. Despite these costs easing, broader-based inflation is likely to set into the economy as input costs on the producer side rise to record levels.”
Download the full report here
Footfall recovery slows in August
Headline Statistics:
- Total UK footfall decreased by 12.4% in August (Yo3Y), a 1.8 percentage point improvement from July. This is worse than the 3-month average decline of 12.3%.
- Footfall on High Streets declined by 13.6% in August (Yo3Y), 2.3 percentage points better than last month’s rate and an improvement on the 3-month average decline of 14.5%.
- Retail Parks saw footfall decrease by 4.1% (Yo3Y), 5.0 percentage points better than last month’s rate and an improvement on the 3-month average decline of 8.6%.
- Shopping Centre footfall declined by 22.7% (Yo3Y), 2.1 percentage points better than last month’s rate and above the 3-month average decline of 23.6%.
Commentary:
Helen Dickinson OBE, Chief Executive, British Retail Consortium:
“Whilst footfall in August continued its modest recovery towards pre-pandemic levels, the rate of improvement slowed. Many people remain concerned about the rising cost-of-living and the price of their energy bills, which has kept them away from visiting high streets and town centres.
With consumer confidence at historic lows, stores continue to focus on converting customer footfall into retail sales. Big events in Birmingham and Edinburgh saw more notable advancements to footfall, as the Commonwealth Games and the Edinburgh Fringe brought more shoppers in.
September brings a new Prime Minister and new government with a difficult task ahead. To help retailers keep prices as low as possible, the government should include a freeze in the business rates multiplier next year on the to do list, otherwise the 10 percent inflationary increase in rates bills will lead to higher prices for customers.”
We want to talk to the MI sector about the building pressures on business, so please do look out for this week’s drop-in announcement and get involved if you can.
