The think tank has predicted that, in the current political environment and with UK consumer price inflation set to rise to 2.5%–3% next year, any growth in non-discretionary retail – including food and grocery – will be offset by a decline in discretionary spend, resulting in an overall retail growth figure of 0.5% in the year.
Shelf prices will increase by an average of 5-8% in 2017, with essentials becoming more expensive, it predicts.
It forecasts that more retailers will leverage technology, consider multichannel or restructure to offset rising costs.
Paul Martin, head of retail at KPMG and co-chairman of the Retail Think Tank, said: “From a macroeconomic perspective, 2016 was a positive year with the UK delivering what is set to be an impressive 2.1% growth in GDP.
“However, the year is not likely to be remembered for this fact but rather the UK’s decision to leave the EU; the election of the new president of the United States, and the repercussions these events may entail for the years to come.”