Top story

Surging food prices have contributed to annual inflation in the retail sector almost doubling in January, according to the latest industry data.

Shop prices rose 1.5% last month, up from 0.8% in December, with non-food inflation accelerating to 0.9% compared with a fall of 0.2% in the previous month.

The shop prices index by the British Retail Consortium and NielsenIQ also showed food prices ramped up by 2.7%, an increase on December’s 2.4%, which is well above the 12- and six-month average price growth rates of 0.5% and 1.1% respectively. It is the highest inflation rate in food since October 2013.

Ambient food inflation accelerated to 2.4% in January, up from 1.7% in December – the highest rate of increase since November 2020.

However, the rise in fresh food prices eased in January, with inflation of 2.9%, slightly down on December’s 3%.

BRC chief executive Helen Dickinson said food prices had been hit by poor harvest in the UK alongside labour shortages.

“The rise in shop prices is playing into wider UK inflation, which is pushing cost of living to the forefront of the political agenda,” she added.

“Many households will find it difficult to absorb the additional costs, as well as others on the horizon. 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 at NielsenIQ, said: “The surge in energy and travel costs is now impacting disposable incomes and is likely to dent consumer’s willingness to spend.

“NielsenIQ research this month shows nearly a half of all households are saying that their most important concern at the moment is the rising cost of living. 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.”

Morning update

Agricultural group Wynnstay has revealed record results for the year thanks to improved farmer sentiment following post-Brexit uncertainty.

Revenues jumped 16% to £500.4m in the year ended 31 October 2021, including significant commodity price inflation.

Underlying pre-tax profits at the group, which manufactures and supplies agricultural products to farmers, also rose 37% to £11.4m.

CEO Gareth Davies said the record results reflected the significantly improved trading environment as well as our initiatives to drive growth, productivity and efficiency.

“Strong farmgate prices and the lifting of uncertainties around Brexit and future financial support have promoted a return to farm investment,” he added.

“Results also benefited from a strong second half across the Group, especially for our arable operations. The 2021 harvest was good, with tonnages and yields reverting to more normal levels, and our fertiliser blending activities generated a windfall gain in a highly disrupted marketplace.”

Davies said trading in the new financial year had begun well and were in line with expectations.

Logistics, parcel freight and courier group DX said trading in the first half of its year to 1 January was in line with expectations despite the tight labour market and customer supply chain disruption.

Group revenues were about 11% ahead of the same period in the prior financial year, with trading momentum continuing into the third quarter.

The FTSE 100 jumped 0.6% to 7,575.42pts as markets opened this morning.

Early risers included Ocado Group, up 4.1% to 1,489p, THG, up 1.3% to 131.4p, Deliveroo, up 1.9% to 158.2p, and Parsley Box Group, up 1.6% to 31p.

McColl’s Retail Group, Glanbia and Nichols were among the fallers, down 3.1% to 7.8p, 1.2% to €12.23 and 1.1% to 1,320p respectively.

Yesterday in the City

The FTSE 100 finished the day 1% ahead at 7,535.78pts.

Shares in Irn-Bru maker AG Barr fizzed 1% higher to 500p after it reported a 17.5% increase in full-year revenues to above pre-pandemic levels.

Tesco and Sainsbury’s had differing fortunes following the latest Kantar data, with the former up 1% to 300p and the latter down 0.9% to 288.2p. Tesco outperformed its Big Four rivals in the past 12 weeks and Sainsbury’s ahead of Asda and Morrisons.

Other risers yesterday included Nichols, up 4.6% to 1,360p, Fever-Tree Drinks, up 3.9% to 2,217p, and French supermarket Casino, which climbed 3.8% to €20.33 following a sell-off after a profit warning earlier in the week.

Ocado, Science in Sport and Premier Foods were among the fallers, down 5.1% to 1,428p, 4.3% to 64.1p and 2.2% to 115.4p respectively.