Shop price inflation steady in December as food prices fall

The British Retail Consortium warned of ‘obstacles on the road ahead’ in 2024.

Shop prices remained 4.3% higher than a year ago, below the three-month average rate of 4.6% (Gareth Fuller/PA) (PA Archive)

Shop price inflation remained steady in December but at its lowest since June 2022, the latest figures show.

Shop prices remained 4.3% higher than a year ago, below the three-month average rate of 4.6%, according to the British Retail Consortium (BRC)-NielsenIQ Shop Price Index.

Households did have reason to celebrate as food inflation fell for the eighth consecutive month to 6.7%, down from 7.7% in November and also slowing to its lowest rate since June 2022.

Fresh food inflation slowed even further, to 5.4% from the previous month’s 6.7%, to reach its lowest point since May 2022.

Non-food products had a more challenging December, with inflation rising again to 3.1% from 2.5% in November following retailers’ investment in Black Friday discounting and ahead of the January sales.

BRC chief executive Helen Dickinson warned that new border checks for EU imports and higher business rates bills from April were “obstacles on the road ahead”.

She said: “Government should think twice before imposing new costs on retail businesses that would not only hold back vital investment in local communities, but also push up prices for struggling households.”

Mike Watkins, head of retailer and business insight at NielsenIQ, said: “NIQ research showed that low price, quality, and availability were the top factors for shoppers when planning where to do their main Christmas grocery shop this year so the further fall in shop prices will have helped shoppers celebrate the festive season.

“But there was a lot of pressure on discretionary spend and price discounting was deeper and began earlier not just in the non-food channel but also in food retail, where promotions got back to a four-year high at the end of the year.”