The rate of price rises in UK shops almost doubled in January, adding to pressure on the cost of living with more increases to come, according to a survey.
Shop-price annual inflation accelerated to a near-decade high of 1.5% from 0.8% a month earlier, the British Retail Consortium’s survey showed. The rate of increase was higher than the six-month average rise of 0.1% and was the highest since December 2012.
The increase was driven by a 0.9% rise in non-food inflation, rebounding from a 0.2% decline in December. Furniture and flooring prices rose particularly fast because of strong demand and higher shipping costs.
Food-price inflation strengthened to 2.7% from 2.4% a month earlier. Fresh food inflation was little changed at 2.9% but the rate of price increases for ambient food rose to 2.4% from 1.7%. Prices were affected by poor harvests, labour shortages and rising global food prices.
The BRC said prices were likely to keep rising strongly. The trend will put further pressure on household budgets with domestic energy prices surging and an increase in national insurance contributions on the way.
Helen Dickinson, the BRC’s chief executive, said:
“The rise in shop prices is playing into wider UK inflation, which is pushing cost of living to the forefront of the political agenda. Many households will find it difficult to absorb the additional costs, as well as others on the horizon. As commodity prices, energy prices and transportation costs continue to rise, it is inevitable that retail prices will continue to follow.”
Mike Watkins, head of retailer insight at NielsenIQ, which compiled the survey, said the impact on disposable incomes was likely to make consumers less willing to spend. The Bank of England faces a dilemma over whether to increase interest rates to curb inflation with some commentators arguing that doing so would harm the economy.
Story originally appeared on fca.org.uk