Food inflation continued to climb in January, hitting 3.9% as retailers grappled with thin margins and rising costs, according to the BRC.
The rate climbed from 3.3% in December to sit above the three-month average of 3.4%, according to the latest monthly BRC-NIQ Shop Price Monitor.
Fresh food prices rose even more sharply, with inflation hitting 4.4%, up from 3.8% in December. Again, this was well above the three-month average of 3.9%.
“Meat, fish and fruit were particularly affected, also reflecting weak supply and stronger demand,” said BRC CEO Helen Dickinson.
Ambient food inflation increased to 3.1%, compared with 2.5% in December and a three-month average of 2.6%.
Non-food prices also entered inflation in the period covered – 1 January to 7 January. Prices were up 0.3% year on year as “categories including furniture, flooring, and health & beauty all saw inflation rise”, said Dickinson. That compares with deflation in non-food in both December (–0.6%) and on average over three months (–0.3%).
Overall shop price inflation was 1.5%, compared with 0.7% in December and a three-month average of 0.9%.
“Any suggestion that inflation has peaked is simply not borne out by these figures,” said Dickinson. “Shop price inflation jumped this month due to high business energy costs and the hike to National Insurance continuing to feed through to prices.
“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, said: “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.”
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