The British Retail Consortium (BRC) reports that the ongoing conflict in the Middle East is now beginning to exert pressure on shop prices across the UK. This assessment comes as the latest Consumer Price Index (CPI) figures reveal headline inflation climbing to 3.3% and food inflation reaching 3.7%.
Harvir Dhillon, an economist at the BRC, noted, “Last month saw the initial indications of inflationary pressure directly linked to the Middle East conflict, primarily driven by escalating fuel costs.” The broader retail landscape presented a mixed picture. While fierce competition led to deflation in clothing and footwear, the grocery sector experienced a gradual rise in food inflation due to increasing cost pressures. Looking forward, Dhillon warned that if food prices mirror the trajectory observed after the Ukraine-Russia conflict, a more significant surge in prices could be expected throughout 2026.
“Although measures like the energy price cap and the removal of green levies might offer some immediate respite, inflation is projected to climb in the coming quarters as the full ramifications of the Middle East conflict become apparent,” Dhillon added. He highlighted that supermarkets and their supply chains, being energy-intensive, are likely to face a disproportionate impact. The anticipated rise in food prices is expected to hit lower-income households the hardest.
The BRC urged the government to direct support towards these retailers, specifically addressing non-commodity charges that inflate business energy bills. Such intervention, they argue, would help temper the peak in food inflation and alleviate the financial strain on households.
Separately, consumer prices for furniture, household equipment, and maintenance saw a decline of -0.4% in March, down from -0.1% in February. However, prices generally increased across most other product categories.
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