Inflation hits new heights

Period Covered: 01 – 07 January 2023

• Shop Price annual inflation accelerated to 8.0% in January, up from 7.3% in December. This is above the 3-month average rate of 7.5%. This leaves shop prices at record-highs.

• Food inflation accelerated to 13.8% in January, up from 13.3% in December. This is above the 3-month average rate of 13.2%. This is the highest inflation rate in the food category on record.
• Non-Food inflation accelerated to 5.1% in January, up from 4.4% in December. This is in line with the 3-month average rate of 4.7%. Inflation rose to a fresh high in this category.

• Fresh Food inflation accelerated in January to 15.7%, up from 15.0% in December. This is above the 3-month average rate of 15.0%. This is the highest inflation rate in the fresh food category on record.

• Ambient Food inflation accelerated to 11.3% in January, up from 11.0% in December. This is above the 3-month average rate of 10.8%. This is the fastest rate of increase in the ambient food category on record.

Helen Dickinson OBE, Chief Executive of the British Retail Consortium, said:

“Retail prices rose in January as discounting slowed and retailers continued to face high input costs. Ambient food inflation accelerated the most as wholesale and bulk prices grew, particularly for sugar and alcohol. Fresh food prices also remained high due to increased food production costs as well as elevated wholesale fruit and vegetable prices. Meanwhile, clothing and footwear prices eased, so customers were able to replenish their wardrobes with some bargains during the January sales.”

“With global food costs coming down from their 2022 high and the cost of oil falling, we expect to see some inflationary pressures easing. However, as retailers still face ongoing headwinds from rising energy bills and labour shortages, prices are yet to peak and will likely remain high in the near term as a result.”

Mike Watkins, Head of Retailer and Business Insight, NielsenIQ, said:

“Consumer demand is likely to be weak in Q1 due to the impact of energy price increases and for many, Christmas spending bills starting to arrive. So the increase in food inflation is going to put further pressure on household budgets and it’s unlikely that there will be any improvement in the consumer mind-set around personal finances in the near term. With shoppers having less money to spend on discretionary retail having paid for their essential groceries, there will be little to stimulate demand across the non-food channels.”