Sector data confirms that food inflation continued to rise during the festive trading period, suggesting that consumers and businesses face another year of higher costs.
The BRC-NielsenIQ Shop Price Index shows annual growth of UK food prices hit a record 13.3% in December, up from 12.4% in November. Fresh food costs contributed the most to the rise, jumping 15% year-on-year. Ambient food prices were up 11% by the same measure.
Overall shop price inflation edged down to 7.3% in December from a record 7.4% the previous month. This was mostly a consequence of some discounting among non-food retailers in the run-up to Christmas.
BRC Chief Executive Helen Dickinson said: “2023 will be another difficult year for consumers and businesses as inflation shows no immediate signs of waning.”
She noted that the prices of many essential foodstuffs were still rising as Russia’s war in Ukraine continued to push up the costs of animal feed, fertiliser and energy. And Dickinson warned that shoppers could be hit with even higher prices when the energy bill support scheme for businesses ends in April and shop owners pass on the higher costs.
Mike Watkins, Head of Retailer and Business Insight at NielsenIQ, added: “Consumer demand is likely to be weak in Q1 due to the impact of energy price increases and for many, Christmas spending bills starting to arrive.
“So the increase in food inflation is going to put further pressure on household budgets and it’s unlikely that there will be any improvement in the consumer mindset around personal finances in the near term.
“With shoppers having less money to spend on discretionary retail having paid for their essential groceries, there will be little to stimulate demand across the non-food channels.”
At the end of last year, some economists stated that the surge in overall inflation had passed its peak. However, the BRC data suggests that higher food prices will keep official figures from the Office for National Statistics (ONS) elevated when published later this month.
