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Highlights
- UK shop prices have surged by 4.4% in July, up from June’s 3.1% year-on-year increase, as per BRC and Nielsen IQ.
- July’s shop price rise has been the biggest increase in shop prices since at least 2005.
- Fresh food inflation hit 8% as per the latest index.
With the rising costs of transport, fertilizers, and animal feed, the cost of fresh food has gone up, leading to soaring shop prices. As per the recent shop price index released by the British Retail Consortium (BRC) and market research firm Nielsen IQ, there has been a price hike of 4.4% in July this year as compared to July 2021, up from June’s 3.1% year-on-year increase. July’s price rise has been the biggest increase in shop prices since at least 2005.
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Rising to the highest level since March 2009, fresh food inflation hit 8% as per the latest index, up from the previous month’s 6.2%. This contributed to the overall food inflation reaching 7%. According to BRC CEO Helen Dickinson, some of the greatest price hikes were witnessed in the dairy sector in products like butter, lard, and cooking fats. She warned businesses and households to get ready to face the rough times ahead as the cost-of-living squeeze aggravates.
Lower-income households are expected to get hit harder due to the rising inflationary pressure. A recent study by Asda and Cber suggests that one out of every five UK households is facing a shortage of £60 per week on average. Shoppers are thus shifting towards discount stores, dropping branded items, and cutting back on luxury spending.
In addition to food, the price of non-food items has also contributed to higher shop price inflation. Owing to greater production and shipment costs, non-food prices have gone up by 3% as compared to July last year. Amid the soaring shop prices, UK investors can keep an eye on the following retail stocks.
Lookers plc (LON: LOOK)
The shares of the British motor retailer, Lookers plc, surged by 4.05% at 11:38 AM (GMT+1) on Wednesday and were trading at GBX 77.00. Boasting a market cap of £290.33 million, Lookers offered its investors an annual dividend yield of 3.3%. The company has given positive returns to its shareholders on both YTD and yearly basis as of 27 July, which stands at 15.79% and 14.93%, respectively.
Frasers Group plc (LON: FRAS)
The UK-based retail and intellectual property firm, Frasers Group plc on Wednesday, plunged by 0.23% at 11:40 AM (GMT+1) and was trading at GBX 884.50. Holding a market cap of £290.33m, the group falls under the FTSE 250 index. Frasers has given positive returns to its shareholders on both YTD and yearly basis as of 27 July, which stands at 14.33% and 48.40%, respectively. However, its EPS lies in the negative territory, at -0.17.
Tesco plc (LON: TSCO)
Leading retailer of groceries and general merchandise, Tesco plc, rallied by 0.54% at 11:46 AM (GMT+1) on Wednesday and was trading at GBX 260.10. Holding a market cap of £19,390.62m, Tesco is currently offering its investors an annual dividend yield of 4.2%. Its EPS lies in the positive zone, at 0.19, and it has also given positive returns of 11.96% to its shareholders on a one-year basis as of 27 July.
