UK shop prices report record highs but peak still to come

Food inflation in supermarkets is currently at its highest rate since records began

The increase in food inflation will put further pressure on household budgets. PA

Inflation accelerated in January in the UK, sending shop prices to a record high, though experts warn the peak has yet to come.

Prices have increased 8 per cent since last January, up from 7.3 per cent in December and above the three-month average of 7.5 per cent, according to the British Retail Consortium-NielsenIQ Shop Price Index.

Overall food inflation reached the highest rate in the category on record, rising 13.8 per cent from 13.3 per cent in December.

Fresh food inflation also reached a record high due to increased production costs as well as elevated fruit and vegetable prices, accelerating to 15.7 per cent from 15 per cent in December.

Ambient food inflation saw the fastest increase on record as wholesale and bulk prices rose, particularly for sugar and alcohol, accelerating to 11.3 per cent from 11 per cent in December.

Meanwhile, clothing and footwear prices eased, allowing consumers to replenish their wardrobes during the January sales.

UK Chancellor says 'best tax cut right now is a cut in inflation' — video

“Retail prices rose in January as discounting slowed and retailers continued to face high input costs,” BRC chief executive Helen Dickinson said.

“With global food costs coming down from their 2022 high and the cost of oil falling, we expect to see some inflationary pressures easing.

“However, as retailers still face ongoing headwinds from rising energy bills and labour shortages, prices are yet to peak and will likely remain high in the near term as a result.”

Inflation around the world — in pictures

• 

  People queue to buy wheat flour at government-controlled prices in Islamabad. Pakistan's economy has been hit hard by a political crisis, as well as devastating floods and the global energy crisis, with the rupee plummeting and inflation at decades-high levels. AFP

• 

  A market in Rio de Janeiro. Brazil's inflation ended 2022 with a sharp slowdown from double-digit peaks seen throughout the year. Reuters

• 

  A market in Istanbul. Turkey's inflation at the end of 2022 stood at 64. 27 per cent, the country's Statistical Institute said, while the independent group of inflation researchers ENAG calculated it at 137. 55 per cent. EPA

• 

  A Walmart in New Jersey. According to a poll, US Republicans and Democrats have distinct views of what’s most important for the government to address amid high inflation. More Republicans name gas and food prices, energy and immigration, while Democrats focus on health care, climate change and poverty. AP

• 

  A used car sales lot in California. US Federal Reserve officials have indicated it’s possibly too early to declare victory over inflation. AFP

• 

  A person walks by a sign showing interest rates at a bank in New York. EPA

• 

  A woman walks with purchases past a store in Berlin. In December, consumer price growth across the Euro zone slowed to 9.2 per cent from 10.1 per cent a month earlier, Eurostat data showed last week. AP

• 

  Workers sit in front of a banner reading "Stop the Inflation Monster" at the Burchardkai Container Terminal as they go on strike for higher wages at the harbour in Hamburg, Germany. Reuters

• 

  Price tags at a market in Nice, France. Reuters

• 

  Commuters cross Waterloo Bridge in London. The British Retail Consortium said spending in store chains rose by 6.9 per cent in annual terms in December, but this was a long way off consumer price inflation, which hit 10.7 per cent in November. Reuters

• 

  Jobseekers in Johannesburg. South Africa’s governing party wants the central bank’s mandate broadened to shore up the economy and promote employment in addition to its existing task of tackling inflation. Reuters

• 

  Social grant recipients stand in a queue outside a post office, as joblessness takes its toll in Meadowlands, South Africa. Reuters

“Consumer demand is likely to be weak in the first quarter due to the impact of energy price increases and, for many, Christmas spending bills starting to arrive,” said Mike Watkins, head of retailer and business insight at NielsenIQ.

“So the increase in food inflation is going to put further pressure on household budgets and it’s unlikely that there will be any improvement in the consumer mindset around personal finances in the near term.

“With shoppers having less money to spend on discretionary retail having paid for their essential groceries, there will be little to stimulate demand across the non-food channels.”