Shop price inflation jumped again in April

The rise in oil prices and VAT drove shop inflation higher in April, but it remains below the levels of December and January.

The annual rate of shop price inflation rose to 2 per cent last month, up from 1.2 per cent in March, according to latest figures from the British Retail Consortium and the polling group Nielsen. Similarly, the rise in commodity prices, including cocoa and oil, lifted food prices to 2 per cent in April, compared with 1.2 per cent a month ago.

However, the BRC said that food inflation had been bound to increase after falling to a three-year low in March.

Stephen Robertson, the director general of the BRC, said: "Food inflation is a quarter of what it was this time last year while some produce – milk, cheese and eggs – is actually cheaper than 2009."

The BRC said the rise in VAT to 17.5 per cent on 1 January had contributed to inflationary pressures and that it would continue to have an impact on shop prices for the remainder of 2010. The impact of rising oil prices on transport and manufacturing costs pushed up the annual rate of non-food price inflation to 2 per cent in April – the highest figure since December 2006 – up from 1.3 per cent in March. Oil prices are up by 70 per cent over the year.

But Mr Robertson said: "The main effects of rising costs and the weak pound have now been felt. With demand still weak, shop prices should be more stable in future months, as long as there are no more big shocks."