Wave goodbye to Poundland… it’s now the ‘£1.25 Shop’! Everyday items such as Red Bull, Penguin bars and Skips are priced above £1 in stores as Britons face squeeze on energy, food and fuel bills
- Poundland first ditched its ‘everything’s £1’ slogan in 2019 and then priced all products between 50p and £5
- But shoppers have increasingly been taking to Twitter in recent months to complain about £1.25 price point
- One financial expert tells MailOnline this price point ‘is about as far as things can be pushed in my opinion’
- Meanwhile Reckitt products such as Dettol are rising by 10% and Unilever’s such as Marmite are up by 11%
- Kraft Heinz reports 12% rise on best-selling products while McDonald’s cheeseburgers are going up 20%
- Retailers say shop price rises are at highest rate since at least 2005, and ONS says CPI inflation is at 9.4%
Britain’s shoppers fear the days of the pound shop as they know it could be over – after noticing a series of items in Poundland are on sale for £1.25 from Red Bull cans to Skips multipacks, and Colgate mouthwash to Iced Gems.
The retailer, which was founded in 1990 and has more than 800 UK stores, first ditched its ‘everything’s £1’ slogan in November 2019 – instead pricing all of its products at a range of different points between 50p and £5.
But shoppers have increasingly been taking to Twitter in recent months to complain about products selling at the stores for £1.25 – and one financial expert told MailOnline that this price point ‘is about as far as things can be pushed in my opinion, any further and volumes are likely to recede at levels that the business can’t support’.
Recent tweets have included: ‘You guys at Poundland need to change your name to £1.25 Land’; ‘So when will Poundland become £1.25 Land’; and ‘Nothing is even a pound anymore, why am I seeing prices like £1.25?’
It comes as hard-pressed consumers across the UK face a major squeeze on family finances amid the rising cost of energy, food and fuel bills among other outgoings – with inflation now running at more than 9 per cent. Even McDonald’s has had to increase the price of its cheeseburgers from 99p to £1.19 for the first time in 14 years.
The price of a pint in London has now hit £8, while petrol is at an all-time high of nearly £2 a litre and annual energy bills could soar towards the £4,000 mark in January having already hit an average of about £2,000 a year.
Many restaurants have put up their prices – such as a Nando’s 1/4 chicken with two sides going up by 50p to £8.75 compared to last year. And there have been huge annual price increases on many products in supermarkets.
Among the biggest rises reported by price comparison site Trolley.co.uk have been Cathedral City 320g mature grated cheddar (£4.33, up 69 per cent on July 2021), 390g Whiskas tinned fish in jelly (£5.95, up 32 per cent), 1 litre Morrisons vegetable oil (£2.49, up 128 per cent) and 460g Heinz Tomato Ketchup (£2.50, up 39 per cent).
While Poundland has been known for years to sell larger products for £2 to £5, it is the £1.25 price point that has irked some customers recently – possibly because such a small rise suggests the products were previously £1.
But Poundland denies that selling items at £1.25 is linked to recent inflationary pressures – insisting that widening what it sells to offer value on a bigger range of products has been the retailer’s strategy for some years now.
Among the items selling for £1.25 on Poundland’s website today were a 250ml can of Red Bull sugar free, a 95g bag of Cadbury Twirl Bites, a six-pack of 23g McVitie’s Iced Gems and a six-pack of 13g KP Prawn Cocktail Skips.
Others for £1.25 included Colgate 250ml Plax Cool Mint Blue Mouthwash, Pura Vegetable Oil 1l, 120ml Zoflora antibacterial disinfectant, 200g Purina One Cat Food With Salmon and 75g Canderel Yellow Sweetener.
Financial expert Sophie Lund-Yates, who is lead equity analyst at Hargreaves Lansdown in Bristol, told MailOnline today: ‘The struggle facing pound shops is twofold in the current environment. On one hand, they are heavily reliant on high street footfall, which has been in decline for years and accelerated by the pandemic. A lot of custom is passive, meaning it’s not a core destination but somewhere you might pop into while out in town.
‘The second major challenge is rising inflation – while the cheaper proposition may entice some as their household budgets come under strain, a lot of what these stores sell falls into discretionary spending.
Poundland has been stocking products for £1.25 since late 2019 ++ Figure on pint of beer is a forecast rise on premium pints at Marston’s in London ++ Figure on McDonald’s cheeseburger is a forthcoming rise and the first since 2008 ++ Nando’s price is compared to August 2021 ++ All other figures are from Trolley.co.uk and are compared to July 2021
A series of items in Poundland are on sale for £1.25 from Red Bull cans to Skips multipacks, and mouthwash to Iced Gems
Poundland denies that selling items at £1.25 is linked to recent inflationary pressures, but it has upset some customers
‘People can live without an extra bar of chocolate or toy. The wider inflationary environment will also mean shops’ input costs are rising, and the customers that frequent pound stores are very price sensitive.
‘When your entire unique selling point is based on sticking to a specific low price, there is very little room to pump up prices to offset the higher costs. £1.25 is about as far as things can be pushed in my opinion, any further and volumes are likely to recede at levels that the business can’t support.’
Another retail industry source told MailOnline today that some pound shops may have to consider a name change if prices keep going up, adding: ‘Given the cost-of-living crisis, pound shops will likely do well, even if their base prices rise, because they will often still be the cheapest option.’
Poundland had said last month that it would be ‘leaning more heavily into its iconic £1 price point’.
And a spokesman told MailOnline today: ‘It’s clear customers are shopping more intentionally and that’s why we’ve been leaning into our £1 price point – around 60 per cent of the grocery items we offer are £1 or less. We don’t have a magic trick up our sleeves to counter inflation, but we’re working flat out to keep our promise of amazing value on everything we offer.’
Poundland as a business appears to be surviving the cost-of-living crisis so far, with owner Pepco Group saying just last month that the UK chain was trading ahead of pre-pandemic levels and winning market share.
It added that Poundland revenue rose 11.4 per cent in the first half of last year to £940million, though on a like-for-like basis it increased by just 3.3 per cent. Overall sales across the group increased 18.9 per cent to £2.1billion.
It comes as a series of announcements on price rises by major firms in recent days has revealed how the squeeze on family finances is rapidly growing – with Kraft Heinz reporting a 12 per cent rise on best-selling products.
Inflation is hitting everything, with the price of McDonald’s cheeseburgers going up by 20 per cent, Reckitt goods from Dettol to Durex rising by 10 per cent and Unilever products such as Marmite increasing by 11 per cent.
Whitworths caster sugar, Colgate mouthwash and Pedigree dog food are among the products on sale at Poundland for £1.25
A 250ml can of Red Bull sugar free is also on sale for £1.25 at Poundland, which has more than 800 stores in the UK
McVitie’s Iced Gems, Purina cat food and Cadbury Twirl Bites are also all on sale for £1.25 at Poundland
Zoflora disinfectant, Pura vegetable oil, Canderel sweetener and Skips are all on sale for £1.25 at Poundland
A pack of eight McVitie’s Penguin bars is also on sale for £1.25 at Poundland, a chain which was founded in 1990
Multipacks of Pom-Bear and Discos crisps are among the products for £1.25 at a Poundland in Coventry, Warwickshire, today
Packs of Rolo and Aero chocolate are also on sale for £1.25 today at the Poundland store in Coventry, Warwickshire
Retailers say shop price rises are now at their highest rate since at least 2005, with the British Retail Consortium citing the annual rate of shop price inflation at 4.4 per cent in July and the figure for food prices at 7 per cent.
Some industry analysts predict food prices will be rising at around 15 per cent later this year, and worse is surely to come with the Office for National Statistics reporting that inflation hit a 40-year-high of 9.4 per cent last month.
Economists have predicted it will rise to 11 per cent before the end of the year – while energy bills could hit £500 for the month of January, after Russia cut back gas supplies to Europe that has seen wholesale gas prices surge.
And Iceland could have to hike prices further after warning it will be hit hard by the soaring cost of energy this year because of its huge reliance on freezers, with its energy bill jumping by £19million in the first quarter of 2022.
In a string of updates for consumer goods firms this week, the owners of products from Heinz baked beans and Cadbury chocolate to Evian water and Dettol floor cleaner have outlined the scale of price hikes facing customers.
Companies are under pressure from soaring business costs of everything from energy and staff to key ingredients such as vegetable oils as supply issues in the wake of the pandemic and war in Ukraine push up prices.
Power bill for just one month could soar to £500
Energy bills could hit £500 for the month of January after Russia cut back gas supplies to Europe.
Wholesale gas prices surged yesterday after Vladimir Putin’s regime halved supplies to Europe through the Nord Stream 1 pipeline, in what Germany condemned as a ‘duplicitous game’.
The move pushed up prices across Europe, with many countries drawing up contingency plans to cut gas and electricity use by 15 per cent to conserve supplies and protect families through the winter.
These include turning off street lights, not heating public swimming pools and shutting down production at some major manufacturers. However, more drastic measures may be necessary.
Germany and other European nations are racing to buy consignments of liquefied natural gas (LNG) via containers from the United States, Africa and the Middle East – but this is pushing up prices and will be insufficient to fill the gap left by Russia.
Any increase in the wholesale cost of gas is pushed through to electricity as it is used as fuel in around 40 per cent of UK power stations.
Separately, there are concerns about the UK’s ability to generate enough electricity to keep the lights on this winter, with the gap between maximum supply and maximum demand said to be ‘tight’. The Electricity System Operator indicated the situation could be particularly hard in the first half of December.
The Grid said it will be able to draw on 5.7 gigawatts of European energy through undersea cables – the equivalent of 10 per cent of capacity at peak times.
But it warned European supplies could be sent to the UK at inflated prices if Russia tightens Europe’s gas supply.
The price cap on energy tariffs is due to rise from just under the equivalent of £2,000 a year – based on typical use – in October and again in January. Initial estimates suggested it would reach around £3,400 in the New Year.
However, analysis by energy industry experts at consultants BFY suggests the new increase in wholesale prices could see the figure hit the equivalent of £3,420 in October and £3,850 in January.
Given energy use is heavy in January as people keep the central heating and lights on for longer, the bill for that month alone could top £500.
Wholesale gas prices rose to all-time highs of 530p per therm for the coming winter on Wednesday morning.
Moscow has blamed maintenance issues, but the Nord Stream move is widely seen as Moscow ‘weaponising’ gas in retaliation for western sanctions. Gemma Berwick, senior consultant at BFY, warned that ‘any further drops in flows will cause further price increase’.
While Britain has typically received only 4 per cent of its gas from Russia, it is linked by pipelines to Europe and is also reliant on securing LNG cargos, meaning prices in the UK are closely correlated with those on the continent.
Earlier this week, MPs on the Commons business committee demanded urgent action to improve the help offered to millions facing punishing energy bills this winter.
The Government’s support for households ranges from £400 to £1,200, but the MPs said this failed to take account of the rises coming this winter. Committee chairman Darren Jones said: ‘Once again, the energy crisis is racing ahead of the Government.
‘To prevent millions from dropping into unmanageable debt, it’s imperative that the support package is updated and implemented before October, when the squeeze will become a full-on throttling of household finances.’
British giant Reckitt Benckiser, whose brands include Dettol, Durex, Finish and Nurofen, said its prices in the second quarter of the year were 9.7 per cent higher than a year earlier.
Despite a huge hit to wallets around the world, shoppers have not been voting with their feet, Reckitt said. The volume of products it sold continued to increase, by 2.2 per cent.
Between higher prices and more sales, the business posted an 11.9 per cent hike in like-for-like revenue, with turnover hitting £3.5billion.
Reckitt said the standout performer was its nutrition arm, which makes baby formula. Net revenue in its nutrition business rose 23.6 per cent in the first half of the year, hitting £1.2billion on a like-for-like basis.
Reckitt has now become the biggest player in the US baby formula market, and benefited from the return of cold and flu as people started mixing again, sparking demand for its products.
The company expects like-for-like net revenue will rise between 5 per cent and 8 per cent in the financial year. Chief executive Laxman Narasimhan said: ‘We have delivered an excellent first-half performance in 2022.’
US group Kraft Heinz has put up prices by 12.4 per cent as it navigates a ‘constantly changing environment’.
Chief executive Miguel Patricio explained the hikes, which are designed to protect profits, saying they are a result of ‘anticipating and adapting to changing market conditions’ and ‘managing inflation through pricing realisation and gross efficiencies’.
Heinz – whose best-selling products range from baked beans and ketchup to soups, sauces and baby food – said sales volumes dipped by 2.3 per cent as some customers were put off by higher prices.
Heinz’s update came weeks after it resolved a row with Tesco over the grocer’s refusal to pass on its price rises to customers.
Products including ketchup, beans and spaghetti hoops started disappearing from shelves as orders were put on hold during the dispute over increases Tesco called ‘unjustifiable’.
The groups recently reconciled and products are now back on the shelves.
The higher prices meant the value of sales made by the company grew more than expected in the three months to June. As a result it is now predicting that annual sales revenue will increase by close to 10 per cent this year, compared to previous predictions of around 5 per cent.
Also this week, Unilever, which makes Marmite and Magnum, said it had raised prices 11.2 per cent, with a warning of more to come. It lost some customers to own-brands rivals as shoppers traded down to cut their bills.
But the hikes still helped Unilever – which also makes Dove and Pot Noodle – to its fastest quarter of sales growth in more than a decade, with overall sales up 8.8 per cent from a year earlier.
Unilever, which is responsible for 400 brands sold around the globe, said it has been forced to pass on increases in its own costs, including raw materials, which amount to about £4billion this year.
Company bosses said further increases are in the pipeline amid a ‘truly unprecedented cost landscape’.
Chief financial officer Graeme Pitkethly said that shoppers are switching to cheaper supermarket own-brand products, however the company is countering this by increasing advertising of its famous names.
‘We’ve stepped up the investment in our brands. We’re definitely advertising more: we stepped up brand marketing investment by €200million in the first half,’ he said.
Prices for Unilever brands, which include Hellmann’s mayonnaise, Cif cleaning products and Wall’s ice cream, rose 11.2 per cent in the three months to the end of June, but at the cost of a 2.1 per cent drop in sales volumes.
Despite selling fewer products, the increase in prices meant that the global value of underlying sales was up by 14.9 per cent in the first half of the year to some £25.1billion.
Industry analysts said the era of high price rises is here to say against the background of rising cost of commodities, ingredients, energy, staff and fuel.
Meanwhile, Cadbury’s US owner Mondelez said it has pushed up prices 8 per cent and French firm Danone, which makes Evian and Activia, said it has jacked prices up by 6.1 per cent.
Inflation concerns hit 40-year high as prices keep rising
Public concern about inflation has reached its highest level for 40 years as prices continue to climb, a survey suggests.
A poll by Ipsos found 45 per cent of British adults thought inflation was one of the most important issues facing the country.
The figure represents not only an increase on the 40 per cent who listed inflation as a concern in June, but also the highest recorded level of concern since Ipsos started its monthly issues tracking survey in the early 1980s.
Concern about rising prices tracks inflation itself, which reached a 40-year high of 9.4 per cent in June, while economists fear it could end up exceeding 10 per cent.
The survey, which asked 1,000 British adults what they thought were the most important issues facing Britain today, found inflation was by far the biggest concern, followed by the economy in general, which was mentioned by 34 per cent of people.
No other issue scored more than 16 per cent, including the NHS, Brexit, climate change and immigration.
People aged between 18 and 34 were even more likely to mention inflation, with 53 per cent saying they were concerned about rising prices.
Mike Clemence, a senior consultant at Ipsos, said: ‘Public concern about inflation continues to increase, matching the rises we see in the official inflation rate.
‘Now almost half of the public mention rising prices as one of the biggest issues for Britain, the highest level we’ve seen since the early Eighties.’
But, he added, ‘very few’ people were worried about unemployment despite the worsening economic picture.
Just 3 per cent of people listed unemployment as a major issue facing the country, the lowest level Ipsos has recorded since it began its issues surveys in 1974.
Mondelez, which also owns Toblerone and Milka, said sales volumes still jumped 5.1 per cent despite it charging more. And Danone’s sales volume ticked up 0.9 per cent in the second quarter.
All this comes as consumers face their own rising energy bills, higher fuel bills and rising interest rates.
Also this week, it was revealed that the 99p cheeseburger at McDonald’s will be lost to the cost of living crunch as the price rises for the first time in 14 years, taking it up 20p to £1.19, while many other big-selling items are showing even bigger increases.
McDonald’s blamed rising costs, and suggested most increases had been limited to 10p to 20p. However, angry customers accused the company of greed and putting profits before people.
And a snapshot survey suggested some of its biggest-selling products are showing much larger hikes, hitting families in the pocket over the summer school holidays.
McDonald’s is putting up the price of a large serving of fries, which weighs around 150g, by 20p to £1.79. This would appear to deliver a huge profit margin given that it is possible to buy a 2.5kg of potatoes at Tesco for just £1.59.
In other changes, Happy Meals for children have gone up by as much as 50p to £3.19 and the Big Mac by 20p to £3.69.
A Filet-O-Fish is up 20p to £3.59 while a sharebox of 20 Chicken McNuggets is up 60p to £5.59. There are suggestions that some branches have increased this product by £1.
Many of the ‘extra value’ and ‘go large’ meal deals have gone up. The McFlurry is up 10p and some hot drinks have risen by as much as 50p.
The increases have been announced by the UK head office, but prices vary across the country as they are decided by franchisees who run its outlets.
The rises come when UK supermarket food inflation is running at about 10 per cent on the back of the higher costs of energy, staff, transport and ingredients such as oil, beef, milk and cheese.
And food inflation continues to rise towards a predicted 15 per cent, not least because of the impact of Russia’s invasion of Ukraine, which has hit supplies of key commodity crops such as wheat, corn and sunflower oil.
These same costs have pushed up the price of fish and chips with many small chippies saying they face closure as a result.
A newsletter from the UK and Ireland chief executive of McDonald’s, Alistair Macrow, said the fast food giant was making ‘some tough choices about our prices’.
He added: ‘We know things are tough right now. We’re living through incredibly challenging times and we’re all seeing the cost of everyday items, such as food and energy, increase in a way many of us have never experienced.
The Grocery Price Index from Trolley.co.uk shows the average price increase at supermarkets compared to July 2021
Another part of the Grocery Price Index from Trolley.co.uk looks at the average price increase over a number of major brands
The British Retail Consortium revealed the annual rate of shop price inflation was 4.4 per cent in July with food at 7 per cent
‘Just like you, our company, our franchisees who own and operate our restaurants, and our suppliers are all feeling the impact of rising inflation.
British Gas adds customers despite price competition being wiped out
More than 200,000 customers joined British Gas as some of its rivals went out of business in the first six months of the year.
The business gained 158,000 new accounts when it took over the responsibility to sell gas and electricity to Together Energy’s customers.
Together was one of around 30 suppliers that have collapsed in the last year. Regulator Ofgem assigned its customers to British Gas.
But the business said it had also managed to attract 46,000 customers during the period, who switched to its services voluntarily.
It came despite the price cap being the cheapest deal on the market, which gives customers little reason to switch.
British Gas reported an adjusted operating profit of £98million, down 43 per cent compared with the same period a year ago, before the energy crisis had properly bitten.
It has been a busy year for energy suppliers such as British Gas.
Gas prices started rising last summer and have not let up since, hitting record highs several times.
It has put the squeeze on suppliers, especially as almost all of them are banned from passing costs on to customers immediately.
The energy price cap, which limits what suppliers can charge households, takes into account the price of gas on international markets.
But as the price cap was only changed once every six months there was a lag between the gas price that suppliers paid and what they could charge their customers.
Partly as a result of this, many of the energy suppliers that were serving the market a year ago are now out of business.
In response to the crisis, Ofgem will now update the price cap – which puts an upper limit on a supplier’s default tariff – every three months.
‘The rise in wholesale commodity prices meant that default tariffs remained cheaper than nearly all new fixed-price tariffs,’ British Gas owner Centrica said.
‘This resulted in more customers on default tariffs than we had hedged for, requiring us to purchase more commodity from the market at prices above those allowed with the price caps.
‘Price cap allowances have been introduced to compensate for these costs, however this recovery will mostly occur in future periods.’
Parent company Centrica said it had swung to a pre-tax loss of £1.2billion, down from a £907million profit a year ago.
‘Although we’re seeing increasing costs, we’re committed to developing and rewarding our people, supporting our suppliers and the 25,000 British and Irish farmers we work with.’
Sources at the company suggested the prices of salads, wraps, and the popular Mayo Chicken will stay same.
The newsletter added: ‘Some prices remain unaffected and some will continue to vary across our restaurants. We understand that any price increases are not good news, but we have delayed and minimised these changes for as long as we could.’
In the supermarket sector, Iceland said it will be hit hard by soaring energy bills this year because of its huge reliance on freezers.
The frozen goods retailer had a massive £70m energy bill last year, equivalent to around 2pc of its sales. In the first quarter alone its bill jumped by £19m, suggesting it is on course to more than double this year.
Energy prices have spiralled in the wake of Russia’s invasion of Ukraine. And the discount grocer, which has close to 1,000 UK stores, is exposed because a third of its sales are frozen food.
In its most recent annual report, Iceland said the volatile energy market means it will be ‘unable to avoid a temporary reduction in profits’ this year.
Ratings agency Fitch said the low profit margins and relative lack of hedging, where companies agree with suppliers to set prices far in advance, leave it vulnerable to the volatility.
Fitch expects Iceland’s profits this year to drop below £100million, compared with £126million last year, as it will not be fully able to pass on the increasing energy costs.
The agency added that if energy costs continue soaring, profits will be consistently lowered and it will be less able to pay down its debts.
Despite the bleak outlook for energy prices Iceland said it would increasingly pick up customers from rivals, as shoppers move from fresh to frozen goods to save cash.
Meanwhile pub group Marston’s is reportedly increasing drinks prices by 7 per cent to 8 per cent in the face of cost pressures, with premium pints now costing £7 to £8 in London.
Marston’s revealed that its electricity costs are expected to be around £2 million higher than previously expected for the first half of the year due to the Ukraine war.
But chief executive Andrew Andrea said the firm has not seen any significant change in visits and sales since the cost-of-living crisis emerged.
Its food sales came under pressure in the recent heatwave as the searing temperatures saw people drink more and eat less.
The chain said food sales weakened over the past four weeks mainly due to the record temperatures, which took the shine off a recent rebound in trade.
Marston’s reported that sales had bounced back to stand slightly above pre-pandemic levels before the heatwave, but that the hot weather had left sales overall 1 per cent lower in the 16 weeks to July 23 compared with the same period in 2019.
Mr Andrea said: ‘Since Covid restrictions were lifted, we have been encouraged with the level of sales as we have transitioned to operating on a ‘business as usual’ basis.
‘In spite of external economic headwinds, we have not seen any discernible change to customer footfall to date and remain cautiously optimistic that we will continue to see similar levels of customer demand across the summer, where we will benefit from our investments in outside space and staycations.’
MailOnline research last month showed it now costs £63.81 to fill up a Fiat 500 with petrol and £65.82 with diesel. A VW Golf with a 55-litre tank costs £100.27 for a full tank of petrol and £103.43 for diesel. A Mercedes E Class driver will need to find £145.85 for petrol and £150.44 with diesel. Filling a Range Rover will now cost £189.60 for petrol and £195.57 for diesel, a Porsche Panamera 4S will cost £164.08 for petrol and £169.25 for diesel and a Ford Transit van costs £169.25 for diesel
Analysis of Trolley.co.uk data by MailOnline in May showed how the average cost of a 20 item shopping basket across all supermarkets is now £3 more expensive than it was in May last year – a rise of 6.45 per cent. Pictured: A graphic showing how individual items in the 20 item basket have increased. The costs are based on average costs of an item across a number of supermarkets and include larger packs and more expensive brands – bringing up the average cost. Pictures are for illustrative purposes and not the actual cost of those items
It came after rival Mitchells & Butlers, which owns around 1,500 pubs, said last week that soaring inflation is harming trade because of cost pressures on food supply, labour and energy. Sales at Marston’s fell by 2 per cent in the 42 weeks of its year so far to July 23 compared with the same period in 2019.
It comes as retailers said shop price rises are at running highest rate since at least 2005.
The annual rate of shop price inflation was 4.4 per cent in July with the figure for food prices at 7 per cent, according to the British Retail Consortium.
The biggest increases were see on fresh food, including fruit vegetables, meat and dairy, which rose by an average of 8 per cent.
Higher figures have been reported recently by others, including the Office for National Statistics, while some industry analysts predict food prices will be rising at around 15 per cent later this year.
British Retail Consortium chief executive Helen Dickinson said: ‘July saw the highest rate of shop price inflation since our index began in 2005, as heightened cost pressures continued to filter through to customers.
‘Rising production costs – from the price of animal feed and fertiliser to availability of produce, exacerbated by the war in Ukraine – coupled with exorbitant land transport costs, led food prices to rocket to 7 per cent.
‘Some of the biggest rises were seen in dairy products, including lard, cooking fats and butter. Meanwhile, non-food prices were hit by rising shipping prices, production costs and continued disruption in China.’
She added: ‘With households enduring a cost-of-living crunch, retailers are expanding their value ranges to offer the widest variety of goods to those most in need, providing discounts to vulnerable groups, and raising staff pay. Nevertheless, households and businesses must prepare for a difficult period as inflationary pressures hit home.’
Mike Watkins, head of retailer and business insight at NielsenIQ, said: ‘Consumers’ household budgets are coming under increasing strain and shelf price increases in both food and non-food have accelerated in recent weeks as more cost prices increases come through the supply chains.
‘The grocery industry in particular is under intense pressure as retailers try to shield customers from the full impact of inflation. At the same time there has been an increase in competitive intensity so customer retention over the summer holiday season will be key to help stem any further fall in volumes.’
Andy Searle, a partner at consultancy Alix Partners, said: ‘We’re not going to go back to the previous low inflation environment – we’re going to be stuck in this environment for a significant amount of time.’