The British Retail Consortium (BRC) has issued a stark warning to consumers, revealing that shop price inflation across the UK accelerated sharply in January. According to their latest data, prices for all goods in shops rose by 1.5 per cent compared to the same month last year, marking a significant increase from the 0.7 per cent rise recorded in December.
Essential Food Items Hit Hardest
This figure not only exceeded economists' expectations of a 0.7 per cent increase but also surpassed the three-month average of 0.9 per cent. The retail body highlighted that households purchasing three specific household essentials – meat, fish, and fruit – are experiencing the most severe impact from these inflationary pressures.
Retailers Point to Rising Costs
Supermarkets and other retailers have attributed the rising food prices to two primary factors: escalating energy bills and the increase in employers' national insurance contributions implemented by Labour Chancellor Rachel Reeves. Helen Dickinson, Chief Executive of the BRC, stated emphatically that any suggestion inflation has peaked is contradicted by these latest 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," Dickinson explained. She added that meat, fish, and fruit were particularly affected, reflecting both weak supply conditions and stronger consumer demand.
Broader Impact Across Retail Categories
The inflationary trend extends beyond food items. Non-food categories, including furniture, flooring, and health and beauty products, all saw their inflation rates rise. Dickinson emphasised the challenging environment, noting: "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."
The BRC further identified "spiralling energy charges" for retailers and suppliers as a key driver, partly caused by increasing green levies, which are now flowing through to retail prices.
Government and Industry Response
A Treasury spokesperson responded to the concerns, stating: "The fair and necessary decisions we made at this budget and the last mean we can deliver on the country’s priorities – cutting waiting lists, cutting debt and borrowing, and cutting the cost of living." They acknowledged that working people are struggling with rising prices but asserted the government is focused on delivering stability and reducing inflation.
The spokesperson referenced Bank of England forecasts suggesting food price inflation peaked in December and is expected to decline. However, this outlook contrasts with the current retail data and consumer experience.
Consumer Behaviour and Promotional Activity
Mike Watkins, Head of Retailer and Business Insight at NIQ, commented on shopper sentiment: "Shoppers are always cautious about spending in January and this will not be helped by the continuation of inflation." Despite the overall inflationary environment, Watkins noted that opportunities for savings still exist at the checkout.
He pointed out that some non-food retailers continue to run promotions, while many food retailers are actively reducing prices on everyday items as a strategy to drive customer footfall and maintain competitiveness in a difficult market.
