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Consumers face more expensive Christmas as retailers start to pass on cost pressures

British households are facing a more expensive Christmas shop after labour shortages and surging costs pushed retail prices higher for the first time since May 2019, according to industry figures.

The British Retail Consortium (BRC) shop price index showed a rise of 0.3% in November compared to the same month last year.

It follows a decrease of 0.4% recorded in October, ending a two and a half year period in which prices have been falling year-on-year.

Now, with globally-sourced commodities and shipping becoming more expensive and lorry drivers and food processing workers harder to find, building cost pressures on businesses are starting to be passed on.

It adds to the burgeoning inflation headache facing households as energy bills and fuel costs rise while tax rises and possible interest rate hikes loom on the horizon.

BRC chief executive Helen Dickinson said: “The impact of labour shortages, rising commodity prices and transportation costs have now very clearly taken their hold on consumer prices.”

The BRC’s index showed prices for non-food products still falling – by 0.1% – in November though this was the slowest decline since May 2019, and down sharply from 1% the month before.

Meanwhile food inflation, which accelerated to 1.1% from 0.5% in October, was the highest since November last year.

Within this, fresh food prices were up 1.2% year-on-year, up from 0.3% a month before, which was the sharpest increase since August 2019.

“With food prices rising, and particularly fresh food… we may find some of our Christmas shopping a little more expensive this year,” Ms Dickinson said.

She also pointed to the increase in global food costs with staples such as vegetables doubling in price in two years.

“With ongoing labour shortages throughout the supply chain expected to continue for some time, and no signs that rising costs of transport and commodities will subside, we expect the rate of inflation to accelerate over coming months,” Ms Dickinson added.

“Retailers are doing all they can to mitigate the impacts for their customers.

“Government also must play its part and work with industry to find long-term solutions to the labour shortages as this will help to relieve cost pressures and protect the pockets of the British public who are already facing mounting costs.”

The shop price index reading for November comes after the official consumer price index (CPI) measure of inflation rose to a 10-year high of 4.2% in October.

CPI, which covers household costs such as energy and fuel as well as shop prices, has been predicted by the Bank of England to reach 5% in the coming months.

A survey published last week by the CBI suggested that retailers have been putting up prices at the fastest rate since 1990, with clothing and department stores seeing big swings.

The retail sector has enjoyed an upturn in sales recently with official figures showing a bounce-back in October after five months of decline – partly attributed to consumers shopping early for Christmas presents for fear of supply chain problems hitting availability.

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Consumers face more expensive Christmas as retailers start to pass on cost pressures

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