UK shop price inflation surged in January, driven by food and cost pressures, complicating the outlook for a smooth fall in headline inflation.
Summary:
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UK shop price inflation jumped to 1.5% y/y in January
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Fastest pace since February 2024, BRC data shows
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Food inflation accelerated to 3.9%, led by meat and produce
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Higher energy costs and National Insurance cited as drivers
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Data challenges claims inflation pressures have peaked
UK shop price inflation accelerated sharply in January, rising at its fastest pace in nearly two years, as higher food, furniture, and health and beauty prices fed through to consumers, industry data showed.
Figures from the British Retail Consortium showed its shop price index rose 1.5% year-on-year in January, up from a 0.7% increase in December and the strongest pace since February 2024. Food prices climbed 3.9% annually, accelerating from 3.3% in December and marking the biggest rise since October, with meat, fish, and fruit leading the gains.
Non-food prices also turned firmer, rising 0.3% year-on-year, the strongest increase since February 2024, as retailers passed on higher operating costs. The BRC said elevated energy bills and the ongoing impact of higher employer National Insurance contributions continued to weigh on pricing decisions, particularly in labour-intensive sectors such as retail.
BRC chief executive Helen Dickinson said the latest data contradicts claims that inflation pressures have peaked, warning that cost increases are still feeding through supply chains.
The BRC data contrasts slightly with official inflation figures, which showed UK CPI rose to 3.4% in December from 3.2%, covering a broader basket of goods and services. Food and non-alcoholic drink prices rose 4.5% year-on-year, below the Bank of England’s November forecast of 5.3%.
Despite the recent pickup, Andrew Bailey has said he expects headline CPI to fall close to 2% by April or May, largely due to favourable base effects from regulated prices and taxes. However, the January shop price data adds to concerns that underlying inflation pressures may remain sticky into the first half of the year.
