LONDON, Oct. 27 (Xinhua) -- Britain's shop price inflation rose to the highest level in two and a half years amid retailers' limited capability to absorb cost hikes, data from the British Retail Consortium (BRC) showed Tuesday.
Shop prices increased 2.1 percent year on year in October, accelerating from 1.4 percent in September, and well above the 3-month average of 1.6 percent, according to the BRC.
Food inflation accelerated to 2.9 percent from 2.5 percent in September, while non-food inflation rose to 1.7 percent from 0.8 percent.
Mike Watkins, head of retailer and business insight at global marketing research firm NielsenIQ, said global supply chain pressures grew over the last six months, but price cuts by food retailers since the end of summer have delayed some of the impact.
High street retailers will now be more reliant on promotions to drive discretionary non-food spending as consumers are becoming more cautious in the face of higher energy and fuel costs, he added.
Commenting on the record-high shop price inflation, BRC Chief Executive Helen Dickinson said, "The dam is starting to break on the huge wave of costs retailers have absorbed over the last two years."
Although retailers still deliver plenty of promotions on sweet treats ahead of Halloween, price hikes of ambient groceries have driven up food inflation, she noted, emphasizing that non-food inflation climbed to an almost three-year peak as high energy and transport costs pushed up prices.
"The message to the Chancellor ahead of tomorrow's Budget could not be clearer: act now, or prices will keep on rising," Dickinson said, arguing that since retailers cannot endlessly swallow higher business rates, employment costs, energy bills and packaging taxes, October's jump in inflation is only the beginning without a change of course. ■
