Consumer prices index (CPI) inflation rose to 4% in January, up from 3.7% in December.
According to figures from the Office for National Statistics, two big factors that drove inflation up were the VAT increase and the continued increase in the price of crude oil.
The British Retail Consortium said the figures imply that retail is not the source of inflationary pressure, with Shop Price Inflation running behind both CPI and RPI at 2.5% in January.
Upward pressures on the CPI index came across categories including furniture and homewares, with price reductions not as “significant as usual” in January.
Downward pressures came from clothing and footwear, with prices falling slightly more between December and January than the same period the year before.
The Retail Price Index inflation was 5.1 per cent in January, up from 4.7 per cent in December.
The BRC said the main driving force behind rising inflation are high fuel and transport costs – the result of soaring global commodity prices, not shop prices.
BRC Economist Richard Lim said: “Inflation has been above the Bank of England’s target for more than a year now. By contrast, the Shop Price Index has stayed at around 2%.
“Our figures show that food inflation is at a 19 month high. Despite that, overall shop prices are still rising more slowly than the official measure which includes petrol, utilities and services. Upward pressure on prices is not coming from the high street.
“The VAT rise had little effect on shop prices in January. The impact of the increase was almost entirely lost among the unusually high number of post-Christmas discounts and promotions.”