UK shop price inflation hits fresh high

Shop price inflation has hit a fresh high, industry data showed on Wednesday, as the cost of food continues to soar.

According the latest BRC-NielsenIQ Shop Price Index, annual inflation was a record 8.4% in February, compared to 8% in January.

Within that, non-food inflation was 5.3%, up from 5.1% in January, while food surged to 14.5%, the highest inflation rate in the food category on record. In January, it was 13.8%.

Helen Dickinson, chief executive of the British Retail Consortium, said retailers were reacting to soaring energy bills, higher running costs and "tougher trading conditions brought about by the war in Ukraine".

She continued: "Fresh food prices, especially vegetables, were also affected by the weaker pound, making produce imports from Europe more expensive.

"While we expect to see the annual inflation rate reduce in the second half of this year, retail prices will remain high over the coming months."

Mike Watkins, head of retailer and business insight at NielsenIQ, said: "With more than half (56%) of UK consumers feeling they are a worse financial position compared to a year ago, and inflation still stubbornly high, many households are trimming back on non-essential spending. And as volume sales are down on last year, some retailers are having to work even hard to encourage customer spend."

Shore Capital said: "The index is likely to cause a wince or two around the breakfast tables of the Monetary Policy Committee members this morning. Such a rate [of 8.4%] is considerably above where the Bank of England needs consumer price inflation to be, suggesting to us that it may wish to impose its will as an influencer of pricing a little more and for longer.

"At an aggregate level, we continue to expect UK CPI to be within a range of 3.0% and 5.0% by the calendar year-end, anticipating sticking levels in 2024 too. Hence our expectation that base rates will rest between 4% and 4.5% for quite a while."