Faced with mounting cost pressures, retailers in the UK are putting up prices at the fastest rate since 1990 whilst benefitting from early Christmas shopping due to fears over supply disruption.
In the CBI’s quarterly Distributive Trades Survey, the balance of retailers reporting higher selling prices stood at +77% in November. That was the highest level since May 1990, with the pace of rises expected to be broadly similar next month.
The survey of 125 companies, including 51 retailers, also found that year-on-year retail sales growth accelerated this month, while internet sales fell for the first time since the question was asked in 2001. Both results will be affected by base effects, reflecting the tightening of Covid-19 restrictions in November 2020, which weighed on overall volumes but pushed up internet sales growth.
The CBI’s analysis suggests the growth in orders placed with suppliers slowed in the year to November, but remained well above the long-run average. Stock levels in relation to expected sales were seen as broadly adequate for the first time since April in November, having hit a series of record lows during the previous six months.
Meanwhile, investment intentions for the year ahead rose strongly for the third consecutive quarter, albeit at a slightly slower pace than last quarter. Overall optimism in the business situation also continued to rise, with the balance of retailers expecting an improvement in conditions over the next quarter – the most positive November 2016.
“Christmas seems to have come early for retailers, with clothing and department stores in particular seeing a big upward swing in sales volumes in November,” said Ben Jones, CBI Lead Economist.
“It seems likely that reports of supply chain disruptions prompted consumers to start their Christmas shopping early. And there are encouraging signs that retailers’ efforts to help avoid any festive disappointments may be paying off, with stock levels seen as adequate for the first time in seven months.
“Overall, retailers are becoming more optimistic, with both employment growth and investment intentions picking up strongly. Cost pressures remain a very real concern, however, with selling prices growing at the fastest pace since 1990.”
NAM Implications:
- We have all experienced the inflation drivers in 2021.
- So no surprises then…
- Only issue is by how much?
- How about 5% for starters…
- …or perhaps a more realistic 10%?
