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Food prices in the UK have experienced their sharpest monthly rise since April 2024, in what experts are calling an "early sign of what is to come".

The latest figures reveal a 0.5% increase in overall food prices between December and January, with ambient food prices jumping by 1%. This rise was driven by higher costs for sugary products, chocolates, and alcohol, according to data shared by the British Retail Consortium (BRC).

The annual inflation rate for food saw a slight easing, rising by 1.6% in January, down from 1.8% in December, according to the BRC-NielsenIQ Shop Price Index. Fresh food inflation decelerated to 0.9%, compared to 1.2% the previous month, while ambient food inflation moderated slightly to 2.5% from 2.8% in December.

Despite month-on-month increase in overall food prices, overall shop prices fell in January, with the rate of deflation slowing to 0.7% from 1% in December.

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Helen Dickinson, chief executive of the BRC, said that January sales provided some relief for bargain hunters, particularly with significant discounts on non-food items like furniture and fashion. However, she warned of the challenge for retailers trying to clear excess stock.

“This month’s figures also showed early signs of what is to come, with month-on-month food prices rising at their fastest pace since April last year," Dickinson said. "Ambient food saw a 1% jump as prices spiked for sugary products, chocolates, and alcohol."

She added that price reductions and deflation may not persist much longer. "Retailers will soon feel the full impact of £7bn of new costs announced at the last budget. Higher employer national insurance contributions (NICs), increased national living wage, and a new packaging levy mean that prices are expected to rise across the board."

Mike Watkins, head of retailer and business insight at NielsenIQ, highlighted the ongoing financial strain many shoppers face. "Shoppers continue to be unsure about spending and many are seeing a continued squeeze on their household incomes," he said.

"So we expect non-food retailers to still promote and food retailers to still offer price cuts over the next few weeks, with shoppers managing their budgets by shopping smart and shopping around for wherever the savings are the most attractive."

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UK inflation unexpectedly slowed in December after two months of rises as hotel prices dipped and tobacco costs eased.

Prices rose by 2.5% in the year to December, down from 2.6% the month before, the Office for National Statistics (ONS) said. It means prices are still rising but at a slower pace than before.

Easing price rises in restaurants and falling hotel prices last month helped the overall inflation rate come down, as did a slowing in tobacco, clothing, and footwear inflation.