Shop price inflation rose to 2.1% in October, according to the British Retail Consortium. That is up from 1.4% in September and the highest rate in two and a half years. For a small retailer, it is a prompt to check the margin on what you sell before Christmas.
01What the BRC found
The BRC-NIQ Shop Price Index, published on 27 October, covers prices collected from 1 to 7 October.
- Overall shop prices: up 2.1% on a year earlier, from 1.4% in September.
- Food: up 2.9%, from 2.5%.
- Non-food: up 1.7%, from 0.8%.
The three-month average for all shop prices was 1.6%, so October's figure is a clear step up.
Helen Dickinson, the BRC's chief executive, said: “Shop price inflation rose to its highest level in two and a half years.”
The BRC said non-food prices were pushed up by high energy and transport costs, with furniture, flooring and DIY most affected.
02Why shop price inflation matters for your margin
Rising shop prices usually mean rising costs further back. Suppliers are passing on what they pay for energy, transport and wages.
So the question for an independent shop is simple. Is your margin on each product still what you think it is?
A supplier price rise you have not passed on comes straight out of your profit. Check your best sellers first, because that is where most of the money is.
The BRC is asking the Chancellor to cut employment costs and cancel the planned 3.5% business rates rise in today's Budget. Those are the BRC's requests, not announced measures.
03Planning cash for higher costs
Higher prices also change your cash flow. The same Christmas order costs more, and you pay for it before you sell it.
Our Q4 margin plan for small businesses walks through what to check, line by line.
If higher costs leave a gap your overdraft cannot cover, talk to us about business growth finance before the gap arrives.
