Shop price inflation driven up by rising food costs

Shop price inflation edged up in December as food price rises continued to add pressure to household budgets, figures indicate.

Food inflation increased to 3.3%, up from November’s 3% and far outstripping wider shop price inflation of 0.7%, according to the British Retail Consortium (BRC) and NIQ data.

Fresh food inflation increased higher still to 3.8%, up from 3.6% in November but below the three-month average of 3.9%.

But deflation on products other than food remained steady at 0.6% amid widespread promotions across popular gifting categories, including toys, books, and home entertainment.

BRC chief executive Helen Dickinson said: “Shop price inflation edged up in December as food prices rose at a faster rate.

“Nonetheless, shoppers still found plenty of value across many Christmas essentials including vegetables, cheeses, and alcohol, helping households to enjoy the festive season.”

She said: “This year, retailers will continue to do all they can to keep prices down.

“While falling energy prices and improved crop supply should help ease some cost pressures, increased public policy costs and regulation will likely keep inflation sticky.”

Mike Watkins, head of retailer and business insight at NIQ, said: “This Christmas, shoppers remained cautious, prioritising affordability.

“Retailers worked hard to encourage spending by keeping supply chain price increases to a minimum, and many food retailers reduced prices in December to support demand.

“Looking ahead to 2026, although inflation has peaked, weak shopper sentiment is likely to persist, so shoppers will continue to seek out lower prices and promotional offers.”