Nearly three out of four UK consumers think prices have risen over the past 12 months and the majority expect a further hit to their finances over the next year, according to new data.
The survey, which was commissioned by GfK and surveyed over 2,000 consumers, found the number that think prices have risen hit 74% in January, up from 52% a year ago. And 74% also expect prices to rise in the coming 12 months, up from 55% in January 2016. More than one in three (34%) expect those price rises to be “more rapid” than in the past 12 months.
The issue of rising prices has come to the fore in recent months as the value of the pound has sunk following the UK’s vote to leave the European Union. There has already been high-profile cases of price rise disputes, for example when Tesco pulled Unilever products from its stores and Toblerone changing the shape of its eponymous chocolate bar to save costs.
Business leaders including Next boss Lord Wolfson have also spoken about price inflation caused by increases to business rates and staff wages due to the increases in the national living wage.
And this morning, the Office for National Statistics (ONS) said annual inflation as measured by the Consumer Prices Index (CPI) reached 1.8% in January, up from 1.6% in December. It marks the fourth consecutive month of rises and means inflation is now at its highest rate since June 2014.
The ONS said the rising price of fuel, as well as increase to food prices, are behind the rise. And with wage growth stagnating, real earnings could start shrinking by the summer, causing a drop in discretionary spending, according to Richard Lim, CEO of Retail Economics.
Joe Staton, head of market dynamics at GfK, says: “The fall in the value of the pound since the Brexit vote has fuelled speculation among both business leaders and consumers alike that we will see accelerated price inflation filter through to the high street this year.
“Consumers have already been hit by higher food and energy prices because the weakness of sterling is raising prices and reducing consumer spending power. This has affected a range of typical purchases form Marmite to Majorca summer holidays.
He asks: “This is good news for brands that represent value-for-money in consumers’ hearts, wallets and minds, but does it mean tough times ahead for everyone else?”