Business rates and wage hike could send inflation soaring, warns BRC

Even though shop price inflation has eased for a sixth month in a row, the BRC chief executive Helen Dickinson has warned that prices could soar again in 2024, due to the “new headwinds” the sector is facing.

“Retailers are committed to delivering an affordable Christmas for their customers. They face new headwinds in 2024 – from government-imposed increases in business rates bills to the hidden costs of complying with new regulations,” said Dickinson.

“Combining these with the biggest rise to the national living wage on record will likely stall or even reverse progress made thus far on bringing down inflation, particularly in food.”

Last Wednesday, chancellor Jeremy Hunt unveiled his autumn statement in which he failed to bring forward any meaningful reforms on business rates, nor did he reintroduce tax-free shopping for tourists.

Dickinson’s warning comes as shop price annual inflation fell to 4.3% in November, down from 5.2% in October, according to the latest figures from BRC-NielsenIQ.

Non-food inflation fell to 2.5% in November, down from 3.4% in October.

Food inflation decelerated 7.8% in November, down from 8.8%, hitting its lowest point since July 2022. Ambient food inflation fell to 9.2%, down from 9.5% in October.

Dickinson added: “Shop price inflation eased for the sixth month in a row as retailers competed fiercely to bring prices down for customers ahead of Christmas. Food inflation eased, thanks to lower domestic energy prices reducing overall input costs, particularly for dairy products.

“Ambient food inflation slowed but remained higher than fresh food due to a larger proportion of goods being imported to the UK and impacted by the weak pound. While health and beauty products saw price cuts as retailers rushed to shift stock before Christmas, clothing prices increased as some retailers continued to hold off on promotional activity.”