Inflation, already at a 30-year high of 5.4pc, is expected to accelerate further in coming months, and the Bank of England warned on Thursday that households will cut back spending in the face of the biggest drop in real incomes since records began in 1990.
Threadneedle Street also slashed its 2022 forecast for consumption growth to 5.5pc, down from 7.75pc.
IGD’s confidence index fell to a reading of -17 at the end of January, its worst level since 2013. Two thirds of consumers said they expected to be worse off last month, and 89pc of shoppers expected food prices to rise this year – the highest level since September 2011.
Figures from the British Retail Consortium also showed in-store sales of non-food items slipping 7.5pc compared to pre-pandemic levels.
Lord Bilimoria, the founder and chairman of Cobra Beer, said that prices are poised to go up as cost inflation bites.
Mr Biliamora, who is also president of the CBI employers’ group, told the BBC: “Virtually every business in every sector at the moment is experiencing this vicious cycle that we’re in, of high inflation, interest rates going up, and the highest tax burden in 70 years.
“From our point of view, our input costs, whether it’s our bottles, whether it’s our high energy production, where the energy prices have soared, whether it is freight costs, which have gone up 10 times, we are seeing this effect.
“What that means, after you try and absorb as much of these increases as you can, wages are increasing as well, you’ve got labour shortages, in just about every sector, it does mean that businesses have to put up prices.”
He reiterated his opposition to planned tax rises in April, saying: “This is completely the wrong time to do this. It will stifle investment and it will stifle growth.”
