Food prices jump after minimum wage increase
Essentials including bread, meat and fish have gone up in price this month, according to the British Retail Consortium (BRC), which released research showing food inflation rose to 2.6pc in April, compared with 2.4pc in March.
Helen Dickinson, chief executive of the BRC, said: 'This comes in the same month retailers face a mountain of new employment costs in the form of higher employer National Insurance Contributions (NIC) and increased National Living Wage.'
Fresh food inflation rose from 1.4pc in March to 1.8pc in April, according to figures compiled by the BRC and NielsenIQ.
Ms Dickinson said: 'Food inflation rose to its highest in 11 months, and non-food deflation eased significantly.'
The increase follows months of warnings about higher prices caused by increases in employment costs.
In last autumn's Budget Rachel Reeves unveiled a 6.7pc increase in the National Living Wage to £12.21 an hour as well as an increase to NICs for businesses. The Chancellor also lowered the threshold at which companies have to pay NICs. The changes came into force earlier this month.
At the same time, retailers are facing new pressures from a looming workers' rights overhaul, which is expected to make it difficult for them to hire more staff at peak periods and to bring people on for part-time roles.
In a separate study on Tuesday, the BRC said that more than half of all retail HR directors expected to have to cut staff numbers in response to Labour's Employment Rights Bill.
Ms Dickinson said: 'Almost 250,000 jobs have been lost in retail over the last five years and many major retailers have already announced further job cuts on the back of increased costs of employment, which kicked in in April.'
The BRC said proposals to force companies to give employees guaranteed hours risked 'making it even harder to keep and create jobs and reduce the flexibility that defines many existing retail roles'.
The Employment Rights Bill will be debated in the House of Lords on Tuesday.
The warning comes as retailers are bracing for a deeper downturn in sales caused by Donald Trump's tariff onslaught.
Retail sales have fallen for seven months in a row, according to the CBI Distributive Trades Survey, albeit at a lower pace in the year to April than the previous month.
However, bosses expect a sharper downturn in May after wholesale volumes declined at one of the fastest rates in the past four years.
'Firms remain pessimistic'
Martin Sartorius, principal economist at the CBI, said: 'Annual retail sales volumes fell more slowly in April, but firms remain pessimistic about the outlook due to the impact of Budget measures, persistently weak consumer sentiment, and global economic uncertainty.'
Retailers said sales in April had been 'poor', the survey showed, with many also expected to cut back on orders at a quicker pace in May amid projections of weaker demand.
Motor trade sales volumes also contracted at an accelerated rate in the year to April.
Mr Sartorius added: 'With no sales recovery on the horizon, firms across the distribution sector want to see the Government use every lever available to boost business and household confidence during these challenging times.'
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