Increasing shop prices herald return of inflation, BRC warns

In its latest Shop Price Index for the month of November, the BRC said that the month was the first time in 17 months that shop price inflation was higher than the previous month.

While food inflation slowed to 1.8% in the period, down from 1.9% in October, fresh food inflation accelerated in November to 1.2%.

Shop price deflation was at 0.6% for the period, up from 0.8% deflation in October. Non-food items remained deflationary at -1.8% in November, up from -2.1% in the preceding month.

Ambient food inflation decelerated to 2.7% in the period, down from 3.1% in October.

Helen Dickinson, the chief executive of the BRC, said: “November was the first time in 17 months that shop price inflation has been higher than the previous month, albeit remaining overall in negative territory. Food prices increased for fresh products such as seafood, which is more vulnerable to high import and processing costs, especially during winter.

“Tea prices also remained high as poor harvests in key producing regions continued to impact supply. While coffee prices experienced a momentary dip, price rises are imminent as global coffee prices approach record highs.

“In non-food, while many retailers unwound some of their discounting, there are still many bargains across fashion and furniture. Customers looking to upgrade their electricals were able to pick up some great deals in early Black Friday sales.”

“With significant price pressures on the horizon, November’s figures may signal the end of falling inflation. The industry faces £7bn of additional costs in 2025 because of changes to employers’ national insurance contributions, business rates, an increase to the minimum wage and a new packaging levy.

“Retail already operates on slim margins, so these new costs will inevitably lead to higher prices. If the government wants to prevent this, it must reconsider the existing timelines for the new packaging levy, while ensuring any changes to business rates offer a meaningful reduction for all retailers as early as possible.”