The increasing cost of sugar has driven shop prices to record highs in March, as shop price inflation jumped amid warnings that soaring food costs are yet to peak.
According to trade association the British Retail Consortium’s (BRC) NielsenIQ index, shop prices are now 8.9% higher than they were a year ago, up from 8.4% in February.
Overall food inflation accelerated to 15% in March, up from 14.5% last month. This is above the three-month average rate of 14.5% and is also the highest inflation rate in the food category on record.
The surging cost of sugar coupled with high manufacturing costs contributed to price rises for chocolate, sweets and fizzy drinks – while fruit and vegetable prices also rose due to poor harvests in Europe.
Subscribe to Grocery Gazette for free
Sign up here to get the latest grocery and food news each morning
Additionally, fresh food inflation rose to 17% in March, up from 16.3% in February. Meanwhile, ambient food inflation accelerated to 12.4% in March, up from 12.2% in a month ago.
“Shop price inflation has yet to peak. As Easter approaches, the rising cost of sugar coupled with high manufacturing costs left some customers with a sour taste, as price rises for chocolate, sweets and fizzy drinks increased in March,” chief executive of the BRC, Helen Dickinson OBE said.
“Fruit and vegetable prices also rose as poor harvests in Europe and North Africa worsened availability, and imports became more expensive due to the weakening pound.
She added: “Food price rises will likely ease in the coming months, particularly as we enter the UK growing season, but wider inflation is expected to remain high.
“Retailers continue to work hard to keep prices, particularly of essentials, as low as possible by expanding value ranges and offering discounts for vulnerable groups.
“Government must also minimise oncoming regulatory burdens, as these will serve as a drag on investment and will ultimately contribute to higher prices for UK consumers.”
Head of retailer and business insight, NielsenIQ, Mike Watkins commented: “Since food prices have risen retailers have seen more visits but less basket spend, as shoppers manage their weekly food bills by shopping little and more often and seeking out the lowest prices.”
