The rate at which prices for food in the U.K. are increasing reached the highest level in over a year and a half to open 2011, mounting additional pressure on policymakers to move to contain inflation, according to Bloomberg. On Wednesday, the British Retail Consortium reported that for January food prices rose by an annual 4.6%, which was the highest gain since June 2009 and a substantial acceleration from the 4% recorded in December. Overall, store prices were up 2.5% year-over year.
The BRC reported that non-food prices only added 0.1% in January from the month before, which indicates that the recent increase in the value-added tax was absorbed almost exclusively by retailers. However, the group forecast rising commodity prices will pressure stores to start passing along the increase to customers. Annual non-food price inflation moved up to 1.3% in January from 1.1% the month before. The news comes as the Bank of England debates whether to tighten monetary policy in order to keep inflationary pressure at bay.