Market News

Story by Suban Abdulla

ONDON (Reuters) -British food price inflation jumped to its highest in nearly a year in April, according to a survey published on Tuesday that said higher costs for retailers could put further upward pressure on shop prices.

The British Retail Consortium warned of the risk of further upward price pressures in the coming months as the industry faces increased costs, including a new packaging levy coming into force in October.

Food prices were up by an annual 2.6% in April, a stronger rise than March's 2.4% increase, and the biggest increase since May 2024 when they rose 3.2%, the BRC said.

But overall shop prices fell by 0.1% in the 12 months to April after an annual fall of 0.4% the month before.

Mike Watkins, head of retailer and business insight at NielsenIQ, which publishes the data with the BRC, said he expected shoppers to remain cautious about spending on discretionary items despite the later timing of Easter this year having helped sales.

The Bank of England is trying to gauge to what extent the higher tax burden for employers will lead to price rises in stores and increase the risk of persistently high inflation pressure.

Britain's headline rate of inflation slowed to 2.6% in March, but the BoE expects it will reach around 3.7% later this year, nearly double its 2% target against a backdrop of rising household bills and higher labour costs.