Rising inflation in January defied expectations, with the increase linked to high business energy costs and the hike to National Insurance, said trade association the British Retail Consortium (BRC).

Shop price inflation increased to 1.5% year on year over the month, compared to 0.7% growth in December, the latest BRC-NIQ shop price monitor found.

Non-food inflation grew to 0.3% year on year (YoY) in January, from a decline of 0.6% the month prior.

Food inflation also rose to 3.9% YoY in January, from 3.3% growth in December, while fresh food inflation jumped to 4.4% over the period, from 3.8% growth the month before.

Additionally, ambient food inflation swelled to 3.1% year on year in January, against growth of 2.5% in December.

BRC CEO Helen Dickinson said: “Any suggestion that inflation has peaked is simply not borne out by these figures.

“Shop price inflation jumped this month due to high business energy costs and the hike to National Insurance continuing to feed through to prices. 

“Meat, fish and fruit were particularly affected, also reflecting weak supply and stronger demand, while non-food categories, including furniture, flooring, and health and beauty, all saw inflation rise.”

She continued: “It is a challenging time for households. Retailers do what they can to keep prices down in a competitive market, but thin margins and rising costs of Government policy make it harder. 

“Government must double down on costs in order to support households. A good place to look is the spiralling energy charges, especially non commodity levies, which are raising operating costs, squeezing margins and flowing through into retail prices.”

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