Higher prices could remain in place throughout the summer, even if ceasefire talks between the US and Iran ease tensions in the Middle East. Businesses and consumers are being warned that the economic fallout from recent disruption could continue for months.
Global shipping delays, rising energy costs and higher raw material prices are increasing pressure on UK businesses, with the impact now filtering through to household spending. Fresh inflation figures suggest retailers are finding it harder to absorb rising costs without passing them on to consumers.
According to the British Retail Consortium (BRC), shop price inflation reached 1.2% in May compared with a year earlier, slightly above the three-month average of 1.1%. Furniture, health and beauty products have seen some of the sharpest increases. Higher oil prices and disruption linked to the prolonged closure of the Strait of Hormuz shipping route were identified as key drivers.
Some products remain more competitive. Retailers are continuing promotions on televisions and audiovisual equipment ahead of this summer’s football tournament in the US. Supermarket competition has also helped keep food inflation lower, with prices rising by 2.7% in May, below the longer-term average of 3.1%.
However, retailers warn that sustained pressure on costs could limit how long discounts continue. Business groups are urging ministers to reduce energy-related taxes and ease regulatory burdens.
Separate research from the British Chambers of Commerce found that 80% of businesses expect disruption from Middle East instability. Manufacturing firms have been hit hardest, while rising energy bills remain a major concern, with more than a third of firms warning they may struggle to pay increasing costs.
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