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 the business expected higher costs: “But we want to absolutely minimise passing that through to customers both in food and in clothing.”
He said that “the overall sentiment from our customers does remain flat”, although customers at the higher-end retailer were “slightly more insulated” than shoppers at some other retailers.
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 more than 6% on its outlook for the economy.
The BRC 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 on Thursday, 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.”
He said price rises were influenced by a number of factors including raw materials, energy costs, wages and tariffs.
“So, ‘we don’t know’ is the short answer to what the inflationary environment looks,” he said.
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.