Shop prices 'are yet to peak and will remain high' as inflation hits new heights

01 February 2023 , 00:01

542     0

Prices are now 8% higher than they were last January (Image: AFP via Getty Images)

Shop prices have hit new heights as the cost of living crisis continues - but experts have warned that the peak hasn't yet been reached.

Prices are now 8% higher than they were last January, up from 7.3% in December and above the three-month average of 7.5%, according to the British Retail Consortium (BRC)-NielsenIQ Shop Price Index.

Overall food inflation has risen from 13.8% from 13.3% in December, which is the highest inflation rate in the category on record.

Fresh food inflation has also reached a record high.

This is due to the increased food production costs, as well as elevated fruit and vegetable prices, which have accelerated to 15.7% from 15% in December.

Everything we know as UK supermarkets ration start rationing fruit and veg

Shelf-stable foods, also known as ambient foods, saw the fastest inflation increase on record as wholesale and bulk prices rose.

Prices for sugar and alcohol have accelerated to 11.3% from 11% in December (Bloomberg via Getty Images)

This is particularly true for sugar and alcohol, with prices accelerating to 11.3% from 11% in December.

On the contrary, clothing and footwear prices eased, which allowed consumers to take advantage of the January sales.

Brits have been warned that high prices "will likely remain high in the near term as a result" of rising energy bills and labour shortages.

Speaking about the rising prices of food, BRC chief executive Helen Dickinson said: "Retail prices rose in January as discounting slowed and retailers continued to face high input costs.

"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."

Fresh food inflation has also reached a record high (Bloomberg via Getty Images)

And Mike Watkins, head of retailer and business insight at NielsenIQ, said that the increase in food inflation may put further pressures on households.

He explained: "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.

"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 mind-set around personal finances in the near term.

Fruit and veg shortages could last until May as supermarkets ration stock

"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."

Milica Cosic