Rising Shop Price Inflation Linked to Middle East Conflict

In March 2023, shop price inflation in the United Kingdom increased to 1.2%, up from 1.1% in February, as rising costs associated with the ongoing conflict in the Middle East began to impact supply chains. This uptick was reported by the British Retail Consortium (BRC) and NIQ, although it remains below the three-month average of 1.3%. While food inflation saw a slight easing from 3.5% to 3.4%, non-food items experienced a reversal from deflation to inflation, rising to 0.1%.

Shop price inflation creeps up as Middle East conflict adds to costsThe Independent

Helen Dickinson, CEO of the BRC, indicated that the conflict in the Middle East is contributing to increased costs within supply chains. She emphasized that while retailers are attempting to mitigate these impacts, inflation is expected to rise. Dickinson noted that there are no indications that inflation will reach the peaks observed in April 2023. She urged the government to consider various regulatory factors that could exacerbate price increases, including the Employment Rights Act and changes in trade with Europe.

Shop price inflation creeps up as Middle East conflict adds to costs

Mike Watkins, head of retailer and business insight at NIQ, highlighted that consumers are becoming increasingly cautious about their spending. Despite a slight decrease in food inflation, shoppers are more aware of their expenditures at checkout. He noted that non-food retailers are hoping for a boost in sales during the Easter period, but further inflation could dampen retail growth.

Shop price inflation creeps up as Middle East conflict adds to costs

The BRC has called on the government to address regulatory issues that may contribute to rising costs. Dickinson stated, “Ignoring businesses’ concerns risks even higher prices for shoppers.” This sentiment reflects a growing concern among retailers about the potential for increased inflation to negatively impact consumer behavior and overall retail performance.

The Independent

While the BRC and NIQ report a general trend of rising inflation linked to the Middle East conflict, specific figures regarding the extent of this impact vary. There is also a lack of detailed information on how long these inflationary pressures may persist or the specific sectors most affected.

Shop price inflation creeps up as Middle East conflict adds to costs

• “Higher costs resulting from the conflict in the Middle East are starting to feed into the supply chain.” — Helen Dickinson, CEO of the BRC

Shop price inflation creeps up as Middle East conflict adds to costs

• “Whilst it’s good news that food inflation slowed in recent weeks, shoppers are increasingly conscious of the amount of money they are spending at the checkout, and non-food retailers will be hoping for a good Easter to drive sales,” — Mike Watkins, Head of Retailer and Business Insight at NIQ

Shop price inflation creeps up as Middle East conflict adds to costs

As the situation evolves, the implications of these inflationary trends will be closely monitored by both retailers and consumers alike.

The Independent