UK shoppers have been hit with the sharpest price hike in nine years as the annual inflation rate jumped to 1.5 percent in January, latest figures showed.
The latest BRC–NielsenIQ shop price index, published on Tuesday, said January’s inflation rate nearly doubled December’s rate of 0.8 percent, and is the highest since December 2012.
The figure was also above the 12-month average decrease of 0.6 and six-month average price rise of 0.1 percent.
Helen Dickinson, chief executive of the British Retail Consortium, said the price hike was driven by a sharp rise in non-food inflation.
“In particular, furniture and flooring saw exceptionally high demand leading to increased prices as the rising oil costs made shipping more expensive,” Dickinson said.
The non-food inflation rate in January rose to 0.9 percent compared to a o.2 percent fall in the previous month, while the 12- and six-month average non-food price changes were -1.3 percent and -0.4 percent, respectively.
Food prices also continued to grow, with an inflation rate of 2.7 percent, 0.3 percentage points up from December and the highest rate since October 2013. The 12- and six-month average food price growth rates were 0.5 percent and 1.1 percent, respectively.
Dickinson said domestic produce was hit particularly hard by the price hike as it was “impacted by poor harvests, labour shortages, and rising global food prices.”
Fresh food inflation slowed slightly in January to 2.9 percent. This is down from 3 percent in December and above the 12- and six-month average price growth rates of 0.1 percent and 1.1 percent, respectively.
Ambient food inflation accelerated to 2.4 percent in January, up from 1.7 percent in December. This is above the 12- and six-month average price increases of 1.1 percent and 1.2 percent, and the highest rate of increase since November 2020.
Dickinson predicted that retail prices will continue to rise.
“The rise in shop prices is playing into wider UK inflation, which is pushing cost of living to the forefront of the political agenda. Many households will find it difficult to absorb the additional costs, as well as others on the horizon,” she said.
“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 its survey suggests that the inflated cost of living is “impacting disposable incomes and is likely to dent consumers’ 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,” he said.
“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.”
