Inflation in UK shops hits record high as food prices soar – business live

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Supermarkets are also scrambling to hire staff to get through the Christmas rush.

Sainsbury’s has revealed it is hiring for 18,000 seasonable jobs – 15,000 roles at its supermarkets, 2,000 at its Argos catalogue retailer and 1,000 in its logistics division.

Back in September, Sainsbury’s gave its lowest-paid shop workers a second pay rise in a year as well as extra discounts and free food during their shifts in a ?25m package to help them cope with rising living costs this winter.

Angie Risley, group HR director at Sainsbury’s, says:

“We know how tough it is for households right now and as well as excellent value for customers we are committed to leading colleague pay.

“Our new higher base rate, colleague discount and free food during shifts ensures colleagues will be well-rewarded for their hard work.”

Britons could face long energy blackouts this winter, as well as soaring prices in the shops.

The government has “war gamed” emergency plans to cope with energy blackouts lasting up to seven days in the event of a national power outage amid growing fears over security of supply this winter.

My colleagues Pippa Crerar and Alex Lawson report:

The Guardian has seen documents, marked “official sensitive”, which warn that in a “reasonable worst-case scenario” all sectors including transport, food and water supply, communications and energy could be “severely disrupted” for up to a week.

They show that ministers will prioritise getting food, water and shelter to the young and elderly people, as well as those with caring responsibilities, if the country experiences blackouts, with the Met Office warning that Britain faces a higher risk of a cold winter.

Whitehall officials are currently stress-testing Programme Yarrow, the confidential plan for coping in the event of a power outage, and have held a series of exercises with government departments and councils across the country in recent days.

Here’s the full story:

High street chain Next says its sales were slightly higher than expected over the last quarter, despite the squeeze on customers.

Next has told the City that its full price sales rose 0.4% in the 13 weeks to 29 October.

It was helped by the colder weather in early September, which encouraged customers to buy autumnwear.

Next says:

Full price sales in the last five weeks have been up +1.4%, boosted by one particularly strong week at the end of September, when temperatures dropped and sales of heavier weight products improved.

Next is sticking with its full-year guidance, having cut its profit forecasts back in September.

There’s little hope that food price inflation will ease off soon, warns Andy Clarke, former chief executive of supermarket chain Asda.

Clarke, now the chairman of operational improvement specialist Newton Europe, has told Radio 4’s Today Programme that we faces a tough winter.

With food inflation already at 11.6%, according to the BRC’s survey today, Clarke warns that it could accelerate higher.

He says:

We’re seeing inflation numbers at over double-digit. There’s nothing we can see in the near term that suggests it’s going to go south of that. If anything, it’s going to go up.

Clarke adds that Christmas will be challenging for families, who are already facing high fuel costs and rising energy bills.

Everyone wants to enjoy Christmas, but you’ve got to take a view that certainly for the next three to six months we’re not going to see any rapid decline in inflation….

I think it’s going to be a tough winter, and food inflation is clearly adding to the burden for families.

Rising prices are already deterring consumers from spending on non-essential items, which is sending shockwaves through retailers.

As Bloomberg points out:

Fast fashion chain Boohoo Group Plc and high street bellwether Next Plc both issued profit warnings in September while Asos Plc is restructuring its business.

Online furniture store Made.com Group Plc is set to enter insolvency due to weaker demand and supply-chain difficulties.

Supermarkets need to offer good value this Christmas to win business from cash-strapped customers, adds Mike Watkins, Head of Retailer and Business Insight at NielsenIQ.

“External factors are keeping shop price inflation at record highs and the challenging economic conditions are significantly impacting consumer confidence and retail spend.

With pressure growing on discretionary spend across both non-food and food retail, delivering good value is the table stake in the battle for shopper loyalty over the next 8 weeks.”

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

UK food prices are surging at the fastest rate on record as the energy crisis, and the Ukraine war, and a shortages of workers all ratchet up the cost of living crisis.

The cost of fresh food in British shops jumped by 13.3% in October, compared to a year ago, the British Retail Consortium reports this morning. That’s the biggest annual increase since at least 2005, when the BRC started collecting the data.

Food prices overall jumped by a record 11.6%, including a 9.4% rise in store-cupboard staples such as tinned food and other less perishable foodstuffs.

Overall shop price inflation, on the BRC’s gauge, accelerated to 6.6% in October from 5.7% – again, the highest on record.

In a blow to struggling families, even essentials such as tea bags, milk and sugar became much pricier.

Helen Dickinson OBE, chief executive of the BRC, says October was a difficult month for consumers – who also saw their energy bills jump as the price cap was raised. Shops are also paying higher wages to attract and retain staff, with some supermarkets raising pay two or three times in the last year.

And there are difficult times ahead, Dickinson warns:

Prices were pushed up because of the significant input cost pressures faced by retailers due to rising commodity and energy prices and a tight labour market. Even the price of basic items went up, with the price of the humble cuppa rising, as tea bags, milk and sugar all saw significant rises.

While some supply chain costs are beginning to fall, this is more than offset by the cost of energy, meaning a difficult time ahead for retailers and households alike.

Dickinson adds that it will be hard for retailers not to hike prices again in the run-up to Christmas, and urges ministers to help the sector by freezing business rates.

Last month’s official inflation report, for September, also showed that soaring food prices were pushing up costs.

Also coming up today

MPs on the Treasury Committee are holding a session exploring the current state of the mortgage market, looking at what support is in place for vulnerable customers strugging with rising interest rates and the cost of living.

We’ll also be watching Britishvolt, the embattled UK battery start-up, which is trying to raise fresh funding from investors to avoid falling into administration.

Manufaturing data from across the eurozone, and trade data from Germany, may show whether Europe has fallen closer to recession.

Investors are bracing for the US central bank, the Federal Reserve, to agree another large rise in interest rates today. The Fed is expected to hike its benchmark rate by another three-quarters of a percent… but will it give any hint that the tightening cycle might ease soon?

The agenda

7am BST: German trade data for September

9am BST: Eurozone manufacturing PMI reports for October

11am BST: US weekly mortgage applications

12.15pm BST: ADP survey of US private sector payrolls

2.15pm BST: UK Treasury committee holds hearing into the UK mortgage market

6pm BST: US Federal Reserve’s interest rate decision