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Highlights
- UK shop prices surged by 3.1% in June 2022 as compared to a year ago, as per the BRC-NielsenIQ shop price index.
- Food inflation has surged from 4.3% in May to 5.6% in June 2022.
- Amid the rising inflationary pressures, retailers have been trying to protect the customers by absorbing the maximum possible costs.
Amid rising supply chain costs and reduced household spending, UK shop prices have reached their greatest inflation rate since 2008. According to the latest figures released by the British Retail Consortium (BRC), shop prices surged by 3.1% in June 2022 as compared to a year ago, which is the highest rate of increase in nearly 14 years. In May, they surged by 2.8%, as per the BRC-NielsenIQ shop price index.
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In June, fresh food prices have surged by 6.2% as compared to last year, marking the greatest rate of inflation since May 2009. Rising fertiliser and animal feed costs could possibly be the main reason behind this surge. This has driven the food inflation from 4.3% in May to 5.6% in June 2022.
These whopping figures have been revealed after the recent figures published from the Office for National Statistics (ONS), stating that UK inflation has hit a fresh 40-year high of 9.1% in May 2022 amid surging food and commodity prices. Owing to rising inflationary pressures, retailers have been trying to protect the customers by absorbing the maximum possible costs.
Supermarkets are expanding and providing more options to their customers while offering rebates to the needier groups. However, if the costs continue to keep rising at the current pace, the Government will have to step up and support the retail businesses in protecting the consumers. The budgets of the shoppers have been squeezed and they are expected to reduce their overall spending and shift to retailers with lower prices.
Amid the rising shop price inflation and other factors, investors can keep an eye on the following FTSE retail stocks before investing.
Lookers plc (LON: LOOK)
Lookers plc is a UK-based motor retailer and aftersales services provider. On 29 June, the company disclosed that its pre-tax profit for H1 2022 stood at around £45m, falling from £50.3m in H1 2021. The company holds a market cap of £290.25 million as of 29 June. On a year-to-date basis, Lookers has offered its shareholders a return of 11.28% as of 29 June, while its one-year return stands at 4.69%. The company has a price-to-earnings (P/E) ratio of 4.78 as of 29 June and is offering an annual dividend yield of 3.4% to its investors. Lookers plc’s shares rallied by 4.05% as the market opened at 8:00 AM (GMT+1) on 29 June, standing at GBX 77.00.
Vivo Energy plc (LON: VVO)
Vivo Energy plc is a UK-based downstream petroleum business that sells its products to retail and commercial customers. On 24 June, the company paid its shareholders an interim dividend of 4.00000 US cents per share. The company has a price-to-earnings (P/E) ratio of 16.20 as of 29 June and is offering an annual dividend yield of 3.2% to its investors. The FTSE250 company holds a market cap of £1,842.13 million as of 29 June. On a year-to-date basis, Vivo has offered its shareholders a return of 10.22% as of 29 June, while its one-year return stands at 48.22%. Vivo Energy plc’s shares were trading at GBX 145.40 at 8:10 AM (GMT+1) on 29 June.
WH Smith plc (LON: SMWH)
WH Smith is a leading UK-based retailer which sells books, stationery, gifts, etc. Recently, the company announced that in the 15 weeks to 11 June 2022, its revenue has surpassed the 2019 levels by 107%. The FTSE250 company holds a market cap of £1,961.04m as of 29 June. The performance of WH Smith has deteriorated lately with both its one-year and YTD return standing in the negative territory as of 29 June, at -11.96% and -0.78%, respectively. WH Smith plc’s shares plunged by 1.97% as the market opened at around 8:00 AM (GMT+1) on 29 June, standing at GBX 1,468.50.
