The trend of falling shop inflation has come to an end, with warnings of increased costs for retailers that will ultimately lead to higher prices for consumers. According to the British Retail Consortium (BRC)-NielsenIQ Shop Price Index, overall shop prices are now 0.6% cheaper than a year ago, but have risen from October’s 0.8% decrease.
Prices for fresh food have seen an increase of 1.2% compared to last November, driven by items such as seafood and tea, which are facing high import and processing costs during winter. On the other hand, coffee prices have experienced a temporary dip as global bean prices approach record highs. Overall food inflation has slowed to 1.8% from October’s 1.9%.
Non-food products remained in deflation, 1.8% cheaper than a year ago, but saw a rise from October’s 2.1% decrease as retailers reduced discounting. Despite this, significant bargains are still available in fashion, furniture, and electricals during early Black Friday sales.
Helen Dickinson, BRC chief executive, expressed concern about the increasing price pressures faced by the industry, citing £7 billion in additional costs expected in 2025 due to various factors such as changes to employers’ national insurance contributions, business rates, minimum wage increases, and a new packaging levy. These added costs are likely to result in higher prices for consumers.
Mike Watkins, head of retailer and business insight at NielsenIQ, noted that consumers are being cautious with their spending, focusing on essentials and holding back discretionary spending. The lower level of inflation could help boost consumer sentiment ahead of Black Friday promotions. Food retailers are extending offers and discounts to drive sales momentum in December.
As we enter a period of potential price increases, it is important for consumers to be aware of these changes and prepare for higher costs when shopping. Keeping an eye out for deals, discounts, and promotions can help mitigate the impact of rising prices on the household budget. Stay informed and make informed purchasing decisions to navigate through these changes in the retail landscape.
