Responding to the latest CPI inflation figures, which show headline inflation rising to 3.0% and food inflation rising 1.3 percentage points to 3.3%, Kris Hamer, Director of Insight of the British Retail Consortium, said:
Headline inflation rose to its highest point in almost a year, driven by rising food inflation and air fares. While the inflation rate of clothing and footwear increased, extensive discounting by retailers saw prices decreasing significantly on the month. The same was true for furniture and household equipment, which despite decreasing in price on the month, returned to inflation for the first time in ten months. Food inflation jumped significantly as retailers anticipated significant additional costs such as the changes to Employers’ National Insurance and increases to the National Living Wage, coming into force in April. There was however some good news as some key foods such as pasta, potatoes and olive oil did drop in price on the month.
A rise in the headline rate of inflation to start 2025 is likely a sign of things to come given the £7 billion worth of additional costs the retail industry is facing this year. Prices are expected to rise across the board over the course of the year. If the government wishes to keep inflation under control, which would ease the burden on consumers, it should mitigate the huge cumulative costs facing the retail industry. Speeding up business rates reform or delaying new packaging taxes would help ease the pressure on prices for the rest of 2025.
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