Prices in major UK shops rose at their fastest pace in almost two years in January, driven by sharper increases in food costs alongside higher prices for furniture, health and beauty products,
according to new industry data.
The British Retail Consortium (BRC) said its shop price index rose by 1.5% year-on-year during the first week of January, more than double December’s 0.7% increase and the highest rate since February 2024.
Food prices were the biggest driver, climbing 3.9% compared with a year earlier, up from 3.3% in December and marking the strongest rise since October. Meat, fish and fruit saw particularly steep increases.
“Any suggestion that inflation has peaked is simply not borne out by these figures,” said Helen Dickinson, chief executive of the BRC. “Shop price inflation jumped this month due to high business energy costs and the hike to National Insurance continuing to feed through to prices.”
Non-food prices also edged higher, rising 0.3% annually — the fastest increase since February 2024 — reflecting cost pressures across a wider range of goods.
The figures come as official data shows UK consumer price inflation rose to 3.4% in December from 3.2%, covering a broader basket of goods and services than the BRC’s measure. Food and non-alcoholic drink prices were up 4.5% year-on-year, below the Bank of England’s 5.3% forecast made in November.
Bank of England Governor Andrew Bailey has said he expects headline inflation to fall close to the central bank’s 2% target by April or May, largely due to one-off changes in regulated prices and taxes this year compared with 2025.
However, retailers are bracing for further cost pressures. From April 2025, employers face a £25 billion increase in National Insurance contributions, a change expected to hit labour-intensive sectors such as retail particularly hard.
The BRC data is based on shop prices collected between January 1 and January 7. Photo by InterestingPics, Wikimedia commons.
