As a result of driver shortages and Brexit-induced red tape, businesses are struggling to restock and it’s consequently beginning to hit UK customers in the pocket, alerting experts to predict a significant rises in retail costs in our very near future.
The BRC and Nielsen IQ observed a 0.4% month-on-month rise, with a 0.6% rise in non-food, in August 2021. There has been a particularly notable sharp increase amongst the electronic goods sector, with reports of difficulties in obtaining microchips, ailed further by shipping problems.
Overall, it is apparent that there has been a marked slowdown of deflation in the UK market of 1.2% in the year-on-year fall recorded in July. Helen Dickenson, chief executive of the BRC commented that “Food retailers are fighting to keep their prices down as far as possible. But mounting pressures – from rising commodity and shipping costs as well as Brexit-related red tape, mean this will not be sustainable for much longer, and food price rises are likely in the coming months.”
Dickenson advises that the government acts now by increasing the availability of HGV driving tests, changing the rules on the funding provided for driver training, and providing temporary visas for EU drivers, in an effort to ease the staff shortages that are becoming evident as the gaps on store shelves widen. “Without government action, it will be the British who will pay the price”, she said.
Disruption to the market has thus far been limited, however, it is anticipated to become much more prevalent heading into the winter months as we prepare for Christmas. Customers can expect to see a narrowed selection available in store, with an increased price tag.
The BRC’s warning follows the prediction of toy retailer The Entertainer, after they announced that they could expect to see prices rise as much as 10% over the next 18 months as a result of supply chain disruption, shortages in labour, and increased shipping and transportation costs. The lack of lorry drivers could also contribute to Christmas being ruined, according to Grocery chain, Iceland.
Mike Watkins, head of retailer and business insight at NielsenIQ, said “the good news for shoppers is that shop price inflation remains below consumer price inflation and any moderate increases in prices are being driven by wider economic conditions and seasonal supply changes.
“With shoppers now returning from their summer holidays, many will be reviewing their household budgets.
“So the next few months will be an important time for retailers to keep prices stable by absorbing as much of any increase in their supply chain costs as possible.”