Shop price inflation nearly doubles in January to highest in decade

Shop price annual inflation accelerated to 1.5 per cent in January, up from 0.8 per cent in December, marking the highest rate of inflation since December 2012.

The figure from the BRC-NielsenIQ Shop Price Index stands in way above to the 12-month average decrease of 0.6 per cent and 6-month average price rise of 0.1 per cent.

Food prices continued to rise, impacted by poor harvests, labour shortages, and rising global food prices. Food inflation accelerated to 2.7% in January, up from 2.4% in December, above the 12- and 6-month average price growth rates of 0.5% and 1.1%, respectively. This is the highest inflation rate since October 2013.

Fresh food inflation slowed slightly in January to 2.9%, down from 3.0% in December, but ambient food inflation accelerated to 2.4%, up from 1.7% in December, the highest rate of increase since November 2020.

Non-Food inflation accelerated to 0.9% in January compared to a fall of 0.2% in December.

“The rise in shop prices is playing into wider UK inflation, which is pushing cost of living to the forefront of the political agenda. Many households will find it difficult to absorb the additional costs, as well as others on the horizon,” Helen Dickinson, chief executive of the British Retail Consortium (BRC), said:

“Retailers are working hard to cut costs, but it would be impossible to protect consumers from any future rises. As commodity prices, energy prices and transportation costs continue to rise, it is inevitable that retail prices will continue to follow in the future.”

Mike Watkins, head of retailer and business insight, NielsenIQ, said a recent separate study by them has shown that the rising cost of living is the most important concern at the moment for nearly half of all households.

“This will mean stores will need to encourage cash-strapped customers to keep shopping and despite the increase in shop prices, retailers are responding by keeping price increases as low possible for as long as possible,” he added.