Alongside its monthly shop price inflation figures, the British Retail Consortium (BRC) has warned that inflation could rocket again next year due to retailers facing soaring business rates bills and a big rise in the national living wage.
Heading into the key Christmas trading period, the BRC’s measure of annual shop price inflation eased for the sixth month in a row to 4.3% in November, down from 5.2% in October and the lowest level since June 2022.
Food inflation decelerated from 8.8% in October to 7.8% in November, thanks to lower energy prices reducing overall input costs, particularly for dairy products. Fresh food inflation slowed significantly, from 8.3% to 6.7%, although ambient food only eased slightly, from 9.5% to 9.2%. The BRC noted that ambient food inflation remained higher than fresh food due to a larger proportion of goods being imported to the UK and impacted by the weak pound.
Meanwhile, non-food inflation fell to 2.5% in November, down from 3.4% in October. Health & beauty products saw price cuts as retailers rushed to shift stock before Christmas, although clothing prices increased as some retailers held off on promotional activity.
The BRC’s Chief Executive, Helen Dickinson, noted that shop price inflation had eased as retailers competed to bring prices down ahead of Christmas.
However, she warned that announcements in last week’s autumn statement risked adding to inflation next year. “They [retailers] face new headwinds in 2024 – from government-imposed increases in business rates bills, to the hidden costs of complying with new regulations,” Dickinson said.
“Combining these with the biggest rise to the National Living Wage on record will likely stall or even reverse progress made thus far on bringing down inflation, particularly in food.”
NAM Implications:
- Still 7.8% on food, and people are at their limits.
- Shoppers are not interested in why…
- So adding warnings of business rates rises and minimum wage burdens do nothing to ease the pain.
- All pivots on the shelf price.
- Leaving the only alternative of spending less.
- Best adjust your forecasts accordingly…
