Prices in British shops fell slightly less sharply in January compared with December, while the cost of food rose at the fastest pace since April last year, according to a survey published on Tuesday.
The British Retail Consortium (BRC) warned of the risk of further price rises as the industry copes with rising costs, including from Finance Minister Rachel Reeves’ decision to increase the employer tax burden in her budget in October.
Annual shop price deflation of 0.7 per cent this month was less than the 1.0 per cent drop in December, the sharpest fall in more than three years, the BRC said.
Food prices rose 0.5% month-on-month in January, a stronger increase than the 0.1% rise in December. Overall, prices fell 0.4% between December and January.
Helen Dickinson, chief executive of the BRC, said retailers’ extensive discounting in January was particularly significant in furniture and fashion. She noted:
“This month’s figures also showed the first signs of what is to come, with food prices rising month-on-month at the fastest rate since April last year.”
Retailers may have to raise prices in response to higher welfare contribution requirements announced by Reeves, along with minimum wage rises and a new packaging levy, she said.
