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Retail price annual inflation accelerated to 1.8% in February, up from 1.5% in January, marking the highest rate of inflation since November 2011, according to the British Retail Consortium (BRC) and NielsenIQ.
The BRC said that food inflation remained the “key driver” behind the price rises.
Food inflation remained unchanged at 2.7% in February. This remains above the 12- and six-month average price growth rates of 0.7% and 1.6%, respectively. This is the highest inflation rate since September 2013.
Fresh food inflation accelerated in February to 3.3%, up from 2.9% in January. This is above the 12- and six-month average price growth rates of 0.4% and 1.7%, respectively. This is the highest inflation rate since March 2013.
However, Non-Food inflation also accelerated to 1.3% in February, up from 0.9% in January, contributing to the price rise. This is above the 12- and 6-month average price decreases of 0.9% and 0.1%, respectively. This marks the highest rate of inflation since September 2011.
Helen Dickinson, chief executive of the British Retail Consortium, said: “Retail prices rose in February at their fastest rate in over a decade. Food inflation remained the key driver behind higher prices, particularly for fresh food which has been impacted by poor harvests, both in the UK and globally.
“Meanwhile, the increase from last month is a result of rising prices for non-food products, particularly health, beauty and furniture. There is little sign of change, with the Bank of England predicting price rises to continue until at least the Spring.”
She added: “Price rises will be unwelcome news for households who already face falling disposable income because of the rise in national insurance and energy price caps. Retailers continue to face cost pressures from higher shipping rates, with crude oil prices having almost doubled over the last year.
“Other pressures include labour shortages, commodity price increases, and rising energy prices. Retailers are going to great lengths to mitigate against these price rises and support their customers, for example, many supermarkets have expanded their value ranges for food. Unfortunately, there are limits to the costs that retailers can absorb.”
Mike Watkins, head of retailer and business Insight, NielsenIQ, said: “Inflation has increased since the start of the year and the underlying trend in shop prices will be upwards over the next few months.
“With falling disposable income for most households, retailers will need to keep encouraging customers to spend by offering choice and value and for some, discounts as well as added benefits for loyal shoppers.”
