In December, the UK witnessed stable shop price inflation at 4.3%, in line with the three-month average rate of 4.6%, as reported by the British Retail Consortium (BRC) from December 1-7. However, the non-food sector faced increasing pressure with a continual rise in prices, contrasting the food sector’s eighth consecutive month of declines.
This trend has resulted in the overall store price growth plateauing at its lowest level since June 2022, contributing to the lowest inflation rate since September 2022, according to BRC findings.
Despite persistent declines in food inflation, largely attributed to retailers’ strategic price reductions for the holiday season, non-food inflation surged to 3.1% in December, surpassing November’s 2.5% and exceeding the three-month average rate of 3%.
Helen Dickinson, BRC’s Chief Executive, highlighted the challenges in the non-food sector in December, noting the rise in price inflation following retailers’ investments in Black Friday discounts and preparations for January sales. She reiterated retailers’ commitment to ensuring competitive prices in 2024 but cautioned about potential obstacles, such as new border checks for EU imports and increased business rates starting April.
Mike Watkins, Head of Retailer and Business Insight at NielsenIQ, provided additional insights, revealing significant pressure on discretionary spending. Watkins noted that price discounting was more pronounced and initiated earlier, not only in the non-food sector but also in food retail, where promotions reached a four-year high at the close of the year.
Navigating these challenges, retailers remain steadfast in their commitment to balancing affordability and sustainability. As external factors may impact household expenditures, retailers strive to provide cost-effective solutions in this evolving retail landscape.
