U.K. shop-price growth accelerated last month to the fastest pace since October 2008 as rising commodity costs and a decline in the pound boosted inflation, the British Retail Consortium said. Retail prices rose 2.9 percent from a year earlier after advancing 2.3 percent in May, the BRC said in an e-mailed statement in London today. On the month, prices rose 0.5 percent after increasing 0.1 percent in May.
Britons are seeing their finances squeezed at the fastest pace since the 1970s as inflation outpaces wage growth and the government implements budget cuts and increases sales tax to reduce the deficit. The Bank of England will keep its key interest rate at a record low tomorrow, economists forecast, as recent survey data adds to signs the recovery is faltering.
“Household budgets are under pressure,” BRC Director General Stephen Robertson said in the statement. “Inflation is being driven by surging world commodity prices, the effect of the weak pound on import costs and higher value-added tax — all beyond retailers’ control.” Food-price inflation accelerated to an annual 5.7 percent in June, the most since May 2009, from 4.9 percent the previous month, while non-food price gains quickened to a three-month high of 1.3 percent from 0.8 percent, the BRC said.