Shop Price Inflation Unexpectedly Surges in January, Defying Predictions
Shop price inflation has defied expectations with a significant jump in January, according to the latest figures from the British Retail Consortium (BRC) and NIQ. The data reveals that any suggestion inflation had peaked is "simply not borne out" by the current trends, presenting a challenging outlook for households across the UK.
Key Figures Show a Sharp Increase
Overall shop inflation was recorded at 1.5% higher than a year earlier in January. This marks a substantial increase from December's rate of 0.7% and exceeds the three-month average of 0.9%. The rise is attributed to several factors, including high business energy costs and the recent hike to National Insurance, which have fed through to consumer prices.
Breakdown by Category
The inflation surge was not uniform across all retail sectors. Non-food items saw inflation rise to 0.3%, a notable shift from the decline of 0.6% observed in December. Products particularly affected include furniture, flooring, and health and beauty items, reflecting broader cost pressures in manufacturing and supply chains.
Food inflation also increased, climbing to 3.9% from December's growth of 3.3%. Within this category, fresh food prices were up 4.4% compared to a year ago. This increase is driven by a combination of weak supply and strong demand for key items such as meat, fish, and fruit, highlighting ongoing volatility in agricultural markets.
Industry Leaders Voice Concerns
BRC chief executive Helen Dickinson emphasised the gravity of the situation, stating, "Any suggestion that inflation has peaked is simply not borne out by these figures." She added, "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."
Mike Watkins, head of retailer and business insight at NIQ, noted the cautious spending behaviour of shoppers in January, which is unlikely to improve with continued inflation. However, he pointed out that "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."
Context and Comparisons
While shop inflation has risen, other metrics show some variation. The most recent grocery inflation figures from Worldpanel, released earlier this month, indicate an easing to 4.3%, down from November's 4.7%. This suggests that while overall shop prices are climbing, specific segments like groceries may experience fluctuating trends due to promotional activities and market competition.
The January data underscores the persistent inflationary pressures in the retail sector, challenging earlier optimism about a downturn. With factors like energy costs and policy changes continuing to impact prices, consumers and retailers alike face an uncertain economic landscape in the coming months.
