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Wine, port and sherry prices fell in December as UK food inflation eased to its lowest rate since June 2022, according to industry data.
The British Retail Consortium (BRC) said on Tuesday that annual food inflation decelerated to 6.7 per cent in December, down from 7.8 per cent in November, marking the lowest level in 18 months.
The BRC shop price index, which provides an early indication of pricing pressures ahead of the publication of official data on January 17, will raise hopes that the squeeze on household finances from elevated price growth is coming to an end.
Global food prices have been rising in recent years spurred by the war in Ukraine, which has disrupted supply chains and led to higher grocery bills, hitting the poorest hardest.
Food prices rises have eased after reaching high levels last year. The slowdown was partly due to seasonal offers and shops lowering the cost of certain items over the festive period, the BRC said.
Helen Dickinson, chief executive of the BRC, said households had “reason to celebrate as food inflation fell for the eighth consecutive month thanks to retailers’ efforts to bring down prices in the run-up to Christmas”.
“There was cause for merriment as prices of wine, port and sherry fell on the month,” she added.
Mike Watkins, head of retailer and business insight at NielsenIQ, which contributed to compiling the data, said: “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.”
However, the BRC also reported an acceleration in non-food inflation to 3.1 per cent in December, up from 2.5 per cent in November. As a result, overall shop price inflation was unchanged at 4.3 per cent in December, its lowest level since June 2022.
Dickinson also warned of “obstacles on the road ahead”, including new border checks for EU imports, and the rise in the corporate tax rate from April, which are likely to drive up costs for the consumer.
“[The] 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,” she said.
Fresh food inflation continued its fast downward trend, easing to 5.4 per cent in December, down from 6.7 per cent in the previous month and well below its peak of 17.8 per cent in April.
Ambient food inflation, items that can be stored at room temperature, also decelerated to 8.4 per cent in December, its lowest level since August 2022. This was down from 9.2 per cent in November.
The BRC figures suggest the official rate of price growth for food and non-alcoholic beverages eased further in December after declining to 9.2 per cent in November from 10.1 per cent the previous month. It reached a 45-year high of 19.2 per cent in March.
