The British Retail Consortium (BRC) reported on Tuesday that the pace of price increases at UK chain stores accelerated slightly in March, with the conflict involving Iran potentially driving inflation higher. The BRC indicated that the annual rise in shop prices increased modestly to 1.2% in March, up from 1.1% in February, though it remained below the three-month average of 1.3%. "Rising costs stemming from conflict in the Middle East are beginning to filter through supply chains. While retailers will work with suppliers to mitigate the impact on prices where possible, inflation is expected to rise," stated BRC Chief Executive Helen Dickinson.

The following are further details from the BRC survey and related context:

Food inflation in March was 3.4%, down from 3.5% the previous month, primarily due to falling dairy prices.

Non-food goods prices increased by 0.1%, following a 0.1% annual decline in February.

The BRC noted that new labor market regulations and healthy food regulations could also add to retailer costs, thereby pushing inflation upward.

The Bank of England is closely monitoring food prices, as it believes they influence public inflation expectations. Public inflation expectations had already risen to their highest level since 2023 in March.

The BRC survey was conducted from March 1 to March 7, immediately following attacks on Iran by the U.S. and Israel.