UK Shop Prices Record Fastest Increase in Nearly Two Years

Prices at major UK retailers rose at their fastest pace in almost two years in January, driven mainly by higher food costs along with price increases in furniture, health, and beauty products, according to industry data released on Tuesday. Figures from the British Retail Consortium showed its shop price index rose by 1.5% year-on-year in January, accelerating sharply from a 0.7% increase in December and marking the strongest rise since February 2024.

Food prices climbed 3.9% compared with a year earlier, up from 3.3% in December and the largest increase since October. Non-food prices also rose, increasing by 0.3% annually, the biggest rise in nearly two years.

BRC Chief Executive Helen Dickinson said the figures showed no sign that inflationary pressures were easing. She pointed to high energy costs for businesses and higher National Insurance contributions as key factors pushing prices higher, with meat, fish, and fruit among the most affected items.

Official inflation data painted a similar picture, with consumer price inflation rising to 3.4% in December from 3.2% previously. Bank of England Governor Andrew Bailey has said inflation is expected to fall close to the 2% target by April or May, largely due to temporary price and tax changes.

Meanwhile, food and non-alcoholic drink prices increased 4.5% year-on-year, slightly below the central bank’s earlier forecast. From April 2025, a £25 billion rise in employer National Insurance contributions is expected to weigh heavily on labour-intensive sectors such as retail. The BRC data was compiled using prices collected between January 1 and January 7. The report was published by Reuters.