Store price inflation highest since January

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The Independent Online

Annual shop price inflation hit its highest level since January last month as soaring petrol costs pushed up food prices, figures revealed today.

The annual rise in the cost of retail prices leapt to 2% in April - reversing recent sharp declines - according to the latest British Retail Consortium (BRC)-Nielsen Shop Price Index.

Food inflation rose to 2% after having dropped to 1.2% in March, which was its lowest level in the history of the index.

The BRC said rising commodity prices, such as oil and cocoa, have put the cost of food under pressure.

Non-food prices also saw a significant hike from 1.3% in March to 2% last month - marking the highest level since the survey began in 2006.

The news comes as wider inflation levels are also moving higher - reaching 3.4% in March, which was higher than expected and raising fears among experts that fuel costs could see inflation rise further still.

The BRC said oil prices, which are up 70% over the year, has a direct impact on the cost of distribution and therefore retail goods, as the vast majority of products are transported by ship or rail.

The weakness of the pound has also pushed up import costs for many retailers, while April retail price inflation figures were further impacted as they came up against sharp falls this time a year ago.

But the BRC said it believed retail price inflation would remain stable throughout 2010, with retailers also slashing prices to remain competitive.

Stephen Robertson, director general of the British Retail Consortium, said: "With commodity prices, including oil and cocoa going up, food prices were almost bound to rise when compared with last month's three-year low.

"Even so, 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."

So-called ambient food (which can be stored and sold at room temperature) saw the biggest rise in food price inflation, to 3% year-on-year, while fresh food inflation increased to 1.2%.

The volcanic ash cloud disruption increased the cost of a small number of items, such as exotic fruits and mange tout, but had little impact as less than 1% of imported fresh fruit and vegetables travel by air, said the BRC.

DIY, gardening and hardware product prices rose by the most in the non-food sector, up by 6.5% on an annual basis.

Furniture and floorings prices also raced higher, with inflation of 3% against 1% in March.

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