Cost of living crisis bites as shoppers see sharpest price rises in a decade

‘Nearly half of all households say their most important concern is the rising cost of living,’ says NielsenIQ

Shoppers have been hit by the highest price rises in almost 10 years after shop inflation almost doubled over the past month, new data suggests.

According the latest BRC-NielsenIQ shop price index, annual shop price inflation jumped from 0.8 per cent in December, to 1.5 per cent in January, the highest rate since 2012.

Food inflation rose from 2.4 per cent in December to 2.7 per cent in January, as price rises reached the highest rate since October 2013,

Ambient food (such as canned and other pre-packaged goods) inflation also jumped to 2.4 per cent in January compared with 1.7 per cent in December, which is the highest increase since November 2020.

The figures, from the British Retail Consortium and research firm NielsenIQ, measured inflation across retailers in the UK over the first week of January, assessing price changes for 500 commonly bought items.

Their data also found that non-food inflation, which includes items such as fashion and furniture, rose to 0.9 per cent in January compared to 0.2 per cent in December.

Helen Dickinson, chief executive of the British Retail Consortium, said: ”January saw shop price inflation nearly double, driven by a sharp rise in non-food inflation.

“In particular, furniture and flooring saw exceptionally high demand leading to increased prices as the rising oil costs made shipping more expensive.

“Food prices continue to rise, especially domestic produce which have been impacted by poor harvests, labour shortages, and rising global food prices.”

Ms Dickinson also said this will directly affect the cost of living crisis, stating “it would be impossible to protect consumers from any future rises” in costs.

However, fresh food inflation did slow slightly from 3.0 per cent in December to 2.9 per cent in January, but is still above the 12-month and six-month average growth rates.

Mike Watkins, head of retailer and business insight at NielsenIQ, said: “The surge in energy and travel costs is now impacting disposable incomes and is likely to dent consumers’ willingness to spend.

“NielsenIQ research this month shows nearly half of all households are saying that their most important concern at the moment is the rising cost of living.”

The figures come as retail analyst Kantar suggested the cost of food shopping is to soar by £180 a year.

Despite the loosening of Covid restrictions in recent months, mounting prices come as sales have continued to fall compared with a year ago when lockdown restrictions saw restaurants, pubs and non-essential retailers closed.

The purchasing habits of Londoners have undergone the greatest transformation, Kantar noted, with take-home sales of food and drink down 11 per cent.

There was, however, a significant surge in sales of vegan and low-alcohol products as customers embraced Dry January and Veganuary.

In the 12 weeks to 23 January overall sales fell 3.8 per cent, although they remain eight per cent higher than pre-pandemic levels, Kantar said.