- BRC: UK food price inflation jumped by 6.7% on an annualised basis last month
- Lower wine, port and sherry prices all helped bring a little respite to households
- Inflation has fallen over the past year amid cooling energy and fertiliser costs
Food inflation increased at the slowest pace for 18 months in December as retailers dropped their prices in the lead-up to Christmas.
The latest British Retail Consortium-NielsenIQ shop price index report showed UK food prices jumped by 6.7 per cent on an annualised basis last month, down from 7.8 per cent in November and marking the lowest reading since June 2022.
Lower wine, port and sherry prices ahead of the festive season all helped bring a little respite to households still struggling with cost-of-living pressures.
Decline: The latest BRC-NielsenIQ shop price index report showed UK food prices jumped by 6.7 per cent on an annualised basis last month, compared to 7.8 per cent in November
Food price inflation began soaring after the loosening of Covid-related restrictions and Russia’s invasion of Ukraine, as costs surged amid higher energy prices and supply chain disruption.
Unexpected weather events, firms hiking wages in response to labour shortages, and Brexit-related trade barriers also contributed to higher food prices in the UK.
But inflation has eased significantly over the past year amid cooling energy and fertiliser costs, and successive interest rate hikes by the Bank of England.
Fresh food inflation peaked at 17.8 per cent in April but now stands at 5.4 per cent, its lowest since May 2022, while ambient food inflation has fallen to 8.4 per cent.
Yet the BRC reported overall shop price inflation remained flat at 4.3 per cent in December due to non-food product inflation growing from 2.5 per cent in November to 3.1 per cent.
It said the rise followed retailers investing in discounts ahead of Black Friday the previous month and before the January sales.
Helen Dickinson OBE, chief executive of the BRC, warned of ‘obstacles on the road ahead’, including higher business rates bills from April and more border checks on European Union imports.
From the end of January, ‘medium-risk’ plant and animal products and ‘high-risk’ food and feed of non-animal origin coming to the UK from the EU will require health certificates.
Further health and sanitary checks, such as physical product checks and safety and security declarations, are set to be introduced in April and October.
Meanwhile, business rates are due to increase by 6.7 per cent from the beginning of April, in line with last September’s consumer prices index rate.
‘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,’ Dickinson said.
