Annual inflation rate increased to 2.2% in July 2024, surpassing the Bank of England’s target.
- The rise was driven by the slower decline in gas and electricity prices compared to the previous year.
- Clothing and footwear prices rose by 2%, slightly offset by falling sportswear costs.
- Retailers face potential business rate hikes, affecting industry viability.
- Government intervention is urged to halt 14 years of rising business rates.
The annual Consumer Prices Index (CPI) inflation rate rose by 2.2% in the twelve months leading to July 2024, surpassing the Bank of England’s target of 2%. This increase indicates growing pressure on consumer costs, driven primarily by changes in utility pricing.
According to recent data from the Office for National Statistics (ONS), the Consumer Prices Index including owner occupiers’ housing costs (CPIH) marked a rise of 3.1% in the same period. The modest decrease in gas and electricity costs compared to the same time last year was a primary factor. The persistence of higher utility costs continues to strain household budgets across the country.
Clothing and footwear witnessed a 2% price increase from July 2024 compared to a rise of 1.6% in June, although the upward trend was partially balanced by a decrease in sportswear prices. This highlights the varied impact of inflation across different retail sectors.
Kris Hamer, Director of Insight at the British Retail Consortium, expressed concerns over the implications of these trends for retailers. “With headline inflation showing signs of rising further, retailers face the prospect of another large rise in business rates next year, which are based on September inflation rates,” he stated. This potential increase could pose significant challenges to the retail industry, which is already dealing with lower inflation on retail products than the overall figure drives.
The call for government action is becoming increasingly urgent, as there is a demand for an end to the prolonged period of increasing business rates linked to decisions made by the Conservative administration over the past 14 years. This policy has contributed significantly to the financial challenges faced by high street stores, impacting their operational viability.
Overall, these developments underscore the complexities within the current economic environment, highlighting the need for strategic intervention.
