UK food inflation rose sharply to 2.6 percent in April, its highest level since May 2023, according to the British Retail Consortium (BRC). The price increase, up from 2.4 percent in March, has triggered warnings from retailers, who are facing a combined £7 billion in new tax-related costs this year, due to last October’s budget.

Helen Dickinson, Chief Executive of the BRC, said:

The days of shop price deflation look numbered as food inflation rose to its highest in 11 months, and non-food deflation eased significantly. Everyday essentials including bread, meat, and fish, all increased prices on the month. This comes in the same month retailers face a mountain of new employment costs in the form of higher employer National Insurance Contributions and increased NLW.”

She continued:

Despite price competition heating up, retailers are unable to absorb the total impact of these £5bn of employment costs and the additional £2bn costs when the new packaging tax comes into effect in October. It is crucial that poor implementation of the upcoming Employment Rights Bill does not add further pressure to costs – pushing prices further up, and job numbers further down.”

Overall, shop prices fell by 0.1 percent year-on-year in April, following a 0.4 percent dro in March, but the downward trend in non-food items is slowing.

Mike Watkins, Head of Retailer and Business Insight at NielsenIQ, said:

Shoppers continue to benefit from lower shop price inflation than a year ago, but prices are slowly rising across supply chains, so retailers will be looking at ways to mitigate this as far as possible. And whilst we expect consumers to remain cautious on discretionary spend, the late Easter will have helped to stimulate sales.”

A separate BRC survey published Tuesday found that more than half of HR directors expect to reduce hiring due to the government’s proposed Employment Rights Bill.

The legislation includes new rules around guaranteed minimum hours and sick pay, which the BRC says could severely impact part-time roles and flexibility in staffing.