The Chancellor of the Exchequer, Jeremy Hunt, is under intense pressure from Britain's leading retail voices to tackle the crippling business rates burden in his upcoming Spring Budget. The urgent plea comes as new figures reveal that shop price inflation is persisting at elevated levels, squeezing both retailers and consumers.
The British Retail Consortium (BRC) has issued a stark warning, revealing that annual shop price inflation held firm at 2.9% in February. This figure remains unchanged from January, defying hopes of a significant slowdown. While food inflation did decelerate, dropping from 6.1% to 5.0%, prices for non-food items actually accelerated, rising from 1.3% to 2.5%.
An Unsustainable Burden
Helen Dickinson, Chief Executive of the BRC, pinpointed the upcoming financial year's 6.7% hike in business rates as a critical threat to the sector. She argues this increase will directly stifle vital investment in shops and their workforce. "The Chancellor must freeze rates to help keep costs down and support thousands of retail businesses to invest in their local communities," Dickinson stated.
This call to action was echoed by Kris Hamer, Director of Insight at the BRC, who highlighted the ongoing pressure from rising supply chain costs. These costs, particularly linked to the Red Sea shipping disruptions, are continuing to filter through to consumer prices.
A Glimmer of Hope in Food Aisles
Amid the challenging landscape, there was a sliver of positive news. Fresh food inflation saw a notable drop to 3.4% in February, down from 4.9% the previous month. This was largely driven by falling prices for fruit and a slower rate of price increases for fish. However, ambient food—items stored at room temperature—saw its inflation rate dip only slightly to 7.2% from 7.7%.
The retail sector's appeal underscores a critical moment for the UK's high streets. With the Spring Budget on the horizon, all eyes are on the Treasury to see if it will deliver the support retailers desperately need to navigate ongoing economic headwinds and protect consumers from further price rises.
