Shop price inflation remained in deflation in February, but the cost of breakfast essentials climbed as food inflation accelerated, according to the latest BRC-NIQ Shop Price Index.
Food inflation hit 2.1% year-on-year, up from 1.6% in January, marking its third-highest monthly increase in the past year. Fresh food inflation also rose to 1.5%, while ambient food inflation reached 2.8%.
Overall shop price inflation held steady at -0.7%, while non-food prices saw deeper deflation at -2.1%, compared to -1.8% in the previous month.
BRC chief executive Helen Dickinson warned that price pressures could continue to build in the coming months due to geopolitical tensions and additional costs from government policies.
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She said: “While shop prices remained in deflation in February, prices on the month saw the biggest increase in the last year. Breakfast, in particular, got more expensive as butter, cheese, eggs, bread and cereals all saw price hikes.
“Climbing global coffee prices could threaten to push the morning costs higher in the coming months.”
Dickinson also urged the government to rethink new business rates proposals and delay the upcoming packaging tax, arguing that these costs will add further strain to retailers and could push inflation even higher.
Meanwhile, NielsenIQ head of retailer and business insight Mike Watkins said rising household bills could see shoppers tighten their discretionary spending.
He said: “With many household bills increasing over the next few weeks, shoppers will be looking carefully at their discretionary spend and this may help keep prices lower at non-food retailers.
“However, the increase in food inflation is likely to encourage even more shoppers to seek out the savings available from supermarket loyalty schemes.”
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