Inflation, already at a 30-year high of 5.4%, is expected to pick up further in the coming months, and the Bank of England warned on Thursday that households would cut spending in the face of the biggest drop in real incomes since records began in 1990.
Threadneedle Street also cut its consumption growth forecast for 2022 to 5.5%, from 7.75% previously.
IGD’s confidence index fell to -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 89% 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 fell 7.5% from pre-pandemic levels.
Lord Bilimoria, founder and chairman of Cobra Beer, said prices are set to rise as cost inflation bites.
Mr Biliamora, who is also chairman of the CBI employers’ group, told the BBC: ‘Virtually every business in every sector is currently experiencing this vicious cycle we find ourselves in, high inflation, high interest rates rising and the highest tax burden in 70 years.
“From our perspective, our input costs, whether it’s our bottles, whether it’s our high energy production, where energy prices have skyrocketed, whether it’s transportation costs, which have been multiplied by 10, we see this effect.
“What that means, after trying to absorb as many of these increases as possible, wages are also going up, you have labor shortages, in just about every industry, that means companies have to increase the prices.”
He reiterated his opposition to the tax hikes planned for April, saying: “Now is absolutely not the right time to do this. It will stifle investment and it will stifle growth.