RPI rise threatens fragile retail

The retail property sector is set for another bruising as the Office for National Statistics' confirmed this morning that the retail prices index rose to 5.6% in September - the highest annual inflation rate for over 20 years.

The BRC estimates that the new RPI figure threatens to land the retail sector with a £350m business rates increase next April since the uniform business rate is set taking into account the RPI inflation rate at September 2011.

This of course comes at a time when retailers are already grappling with an increase in VAT, low bank lending levels and fragile consumer confidence.

BCSC has been quick to pounce, warning that high levels of business rates will impact retailers' expansion plans. It will in turn also affect the viability of retail development, which is dependent on securing retailers and acceptable levels of rental income.

BCSC, in its letter to local government minister Bob Neill today, writes: "As occupiers' business rates liability continues to increase, a greater share of occupancy costs will be absorbed by rates, eroding potential rental values and therefore the viability of proposed developments."

It is evidently time for the government to start paying closer attention to its independent review of the UK high street, led by sharp-tongued retail guru Mary Portas, which is identifying the level of business rates as a thorn in the retail property sector's side.