The costs of higher wages and National Insurance tax changes coming in April will be passed on to consumers, it said.

M&S chief executive Stuart Machin said: “We have got some cost headwinds coming our way through the supply base, but we want to absolutely minimize passing that through to customers both in food and in clothing.”

Over the key Christmas period, M&S revealed an 8.9% rise in comparable food sales while home and beauty sales grew by 1.9%.

Overall sales for the 13 weeks to 28 December increased by 5.6%.

However, M&S’s share price fell by 6.3% on its outlook for the economy.

The BRC has forecast that food price inflation would rise from 1.8% last month to 4.2% in the latter half of this year, and that price rises will continue for vegetable oil, orange juice, butter, and coffee.

It added that overall shop prices, which have been falling, will start rising again.

But the Treasury said the independent Office for Budget Responsibility had forecast that food inflation will stay below to 2.2% this year.

Chancellor Rachel Reeves has previously said “the right thing to do was to ask businesses and the wealthiest in our country to pay a bit more”.

In her October Budget Reeves said the National Living Wage for over 21s would increase from £11.44 to £12.21 an hour from April and that employers’ National Insurance contributions would rise from 13.8% to 15%.

Retailers hit back, warning in November that higher wages and taxes would make job cuts “inevitable”, and lead to price rises and shop closures.

Tesco’s chief executive Ken Murphy, who announced a strong rise in Christmas trading, was circumspect on prices.

“What we’re not saying is there will be no inflation,” he said. “What we’re saying we’ll do our very best to minimise the impact.”

Tesco reported a 4.1% rise in UK sales for the six weeks to 4 January, with food sales up 4.7%. It expects full-year operating profits to reach £2.9bn.