Shop price inflation rose sharply in January, defying expectations that price pressures had peaked, according to the latest British Retail Consortium (BRC)-NIQ Shop Price Monitor.

Overall shop price inflation increased to 1.5% year-on-year in January, up from 0.7% in December and above the three-month average of 0.9%.

The uplift was driven primarily by higher food prices, with food inflation rising to 3.9%, compared to 3.3% the previous month. Within this, fresh food inflation climbed to 4.4% (from 3.8%), while ambient food inflation increased to 3.1% (from 2.5%).

Non-food prices also moved back into inflationary territory, rising by +0.3% year-on-year in January, compared to a -0.6% decline in December.

Helen Dickinson, Chief Executive of the British Retail Consortium, said the latest figures show inflationary pressures remain persistent, with rising costs continuing to filter through to consumers.

“Any suggestion that inflation has peaked is simply not borne out by these figures,” she said. “Shop price inflation jumped this month due to high business energy costs and the hike to National Insurance continuing to feed through to prices.”

Dickinson added that meat, fish and fruit were “particularly affected”, reflecting a combination of weaker supply and stronger demand, while non-food categories including furniture, flooring, and health and beauty also saw inflation rise.

“It is a challenging time for households,” she said. “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.”

She urged the Government to take action to reduce business costs, pointing in particular to “spiralling energy charges”, including non-commodity levies, which she said are increasing operating costs and putting further pressure on margins.

Mike Watkins, Head of Retailer and Business Insight at NIQ, said January is typically a cautious period for shoppers, and that ongoing inflation is likely to add to pressure on spending.

“Shoppers are always cautious about spending in January and this will not be helped by the continuation of inflation,” he said.

However, Watkins said consumers can still find value in the market, with some retailers maintaining promotional activity.

“There are still savings to be made at the checkout as some non-food retailers are still on promotion and many food retailers continue to reduce prices on everyday items as a way to drive footfall,” he added.