Cost of living: Grocery inflation hits new record level, adding '£788 to annual bill'

Grocery inflation has hit a new record level since Christmas, according to closely watched industry data which has abruptly ended hopes that price falls would gain momentum.

The Kantar Worldpanel agency reported an annual rate of 16.7% during the four weeks to 22 January.

It marked a steep increase on the 14.4% seen in December, when discounting by chains in the run-up to the festive season helped temper the pace of price increases.

The report said that the record new rate meant that families faced a potential £788 annual rise in the cost of their regular shopping basket as a result of the hike.

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Overall take-home grocery sales rose by 5.7% during the four week period, Kantar said.

It noted that while promotional activity among the supermarket chains had dropped away, by the most since 2008, intense competition for market share meant that value range price pledges and loyalty schemes had now become the major battlegrounds.

Kantar's head of retail and consumer insight, Fraser McKevitt, said of the price picture: "Late last year, we saw the rate of grocery price inflation dip slightly, but that small sign of relief for consumers has been short-lived.

"Grocery price inflation jumped a staggering 2.3 percentage points this month to 16.7%, flying past the previous high we recorded in October 2022."

Milk, eggs and dog food continued to lead the way in the inflation stakes.

Food, along with the cost of many other everyday products, has become more expensive largely due to the surge in energy prices seen since the Russian invasion of Ukraine.

While the war can also be blamed for many commodity costs, such as wheat, rising markedly, it is hoped that grocery inflation will soon peak.

The main rate of inflation, the consumer prices index (CPI), has slipped for two months in a row but is expected to start easing markedly at the end of winter.

Food costs are among the reasons for the CPI measure remaining stubbornly high.

At 10.5%, it is well above the Bank of England's 2% target and policymakers are expected this week to impose a further rise in the Bank's base interest rate, of 0.5 percentage points, to maintain their pressure on inflation.

-sky news