Food inflation rose in February to 2.1% and is likely to exceed 4% in the second half of 2025 as companies face rising costs, the BRC has warned.
February’s food inflation figure climbed from 1.6% in January and was above the three-month average of 1.8%, according to the latest BRC-NIQ Shop Price Index.
Ambient food saw the biggest increase, with prices up 2.8% year on year in February. It was higher than January’s rate of 2.5% and above the three-month average of 2.7%.
Meanwhile, wider shop prices including non-food remained in deflation – down 0.7% year on year in February, the same as January’s fall and slightly above the three-month average of –0.8%.
BRC CEO Helen Dickinson said inflation would likely “rise across the board as the year progresses, with geopolitical tensions running high and the imminent £7bn increase in costs from the autumn budget”, including an increase in National Insurance paid by employers from April.
Further pressure would come from the “poorly designed packaging levy arriving on the doorsteps of retailers” in October, while the government has also proposed increasing business rates payable on the largest properties from 2026.
“We expect food prices to be over 4% up by the second half of the year,” said Dickinson.
“If government wants to keep inflation at bay, enable retailers to focus on growth, and help households, it must mitigate the swathe of costs facing the industry.
“It can start by ensuring no shop ends up paying more than they already do under the new business rates proposals, and delaying the new packaging taxes.”
She said breakfast in particular got more expensive in January “as butter, cheese, eggs, bread and cereals all saw price hikes”.
“Climbing global coffee prices could threaten to push the morning costs higher in the coming months,” she added.
Fresh food inflation increased to 1.5% year on year in February, above January’s 0.9% and the three-month average of 1.2%.
Non-food was in 2.1% deflation year on year in February, compared with –1.8% in January.
Mike Watkins, NIQ head of retailer and business insight, said inflation in food would lead to more shoppers making use of loyalty scheme discounts.
“With many household bills increasing over the next few weeks, shoppers will be looking carefully at their discretionary spend and this may help keep prices lower at non-food retailers,” he said.
“However, the increase in food inflation is likely to encourage even more shoppers to seek out the savings available from supermarket loyalty schemes.”
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