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Shop price inflation hit 1.5% in January, according to the latest data from the British Retail Consortium (BRC) and NIQ, rising from 0.7% in December and exceeding expectations.
The BRC – NIQ shop price monitor revealed that food inflation climbed to 3.9% in January, up from 3.3% the previous month. Fresh food prices increased by 4.4% year on year, while ambient food inflation grew to 3.1%.
Non-food retailers saw a return to inflation at 0.3%, following a 0.6% decline in December. This shift was driven by price increases in furniture, flooring, and health products as business energy costs and National Insurance hikes fed through.
Despite seasonal promotions in the non-food sector, overall price levels rose by 0.4% between December and January. The data indicates that shop price inflation is now trending above the three-month average of 0.9%.
British Retail Consortium chief executive Helen Dickinson said: “Any suggestion that inflation has peaked is simply not borne out by these figures. Shop price inflation jumped this month due to high business energy costs and the hike to National Insurance continuing to feed through to prices. Meat, fish and fruit were particularly affected, also reflecting weak supply and stronger demand, while non-food categories, including furniture, flooring, and health and beauty, all saw inflation rise.
“It is a challenging time for households. Retailers do what they can to keep prices down in a competitive market, but thin margins and rising costs of Government policy make it harder. Government must double down on costs in order to support households. A good place to look is the spiralling energy charges, especially non‑commodity levies, which are raising operating costs, squeezing margins and flowing through into retail prices.”
Mike Watkins, NIQ head of retailer and business insight, added: “Shoppers are always cautious about spending in January and this will not be helped by the continuation of inflation. However, there are still savings to be made at the checkout as some non-food retailers are still on promotion and many food retailers continue to reduce prices on everyday items as a way to drive footfall.”
