The British Retail Consortium (BRC) believes that with significant price pressures on the horizon, November’s figures may signal the end of falling inflation in the UK, however fashion remained in deflation.

Shop price deflation was 0.6% in November, up from deflation of 0.8% in the previous month, according to the BRC-Nielseniq Shop Price Index. This was slightly above the three-month average rate of -0.7% and shop price annual growth remained its lowest rate since September 2021.

Non-food remained in deflation at -1.8% in November, up from -2.1% in the preceding month, which was above the three-month average rate of -2.0% and means inflation was in-line with levels last seen in mid-2021.

BRC’s chief executive Helen Dickinson explains that while many non-food retailers unwound some of their discounting, there are still many bargains for consumers across fashion and furniture. 

However, she also notes that November was the first time in 17 months that the UK’s shop price inflation overall has been higher than the previous month, albeit remaining overall in negative territory.

Food inflation slowed to 1.8% in November, down from 1.9% in October. This was below the three-month average rate of 2.0%. The annual rate continues to ease in this category and inflation remained at its lowest rate since November 2021.

Fresh food prices increased due to it being more vulnerable to high import and processing costs, especially during winter and tea prices also remained high as poor harvests in key producing regions continued to impact supply. 

UK non-food sales remained in deflation in November 

Dickinson is keen to point out that “with significant price pressures on the horizon, November’s figures may signal the end of falling inflation.”

She warns the UK retail industry faces £7bn of additional costs in 2025 because of changes to employers’ national insurance contributions, business rates, an increase to the minimum wage and a new packaging levy. 

“Retail already operates on slim margins, so these new costs will inevitably lead to higher prices,” states, adding: “If the government wants to prevent this, it must reconsider the existing timelines for the new packaging levy, while ensuring any changes to business rates offer a meaningful reduction for all retailers as early as possible.”

NielsenIQ’s head of retailer and business insight Mike Watkins agrees, adding: said: “Shoppers are still being cautious by shopping savvy for the essentials and holding back their discretionary spend, so the lower level of inflation should help sentiment ahead of Black Friday promotions.

“And with lower inflation than this time last year, many food retailers are extending offers and discounts to help sales momentum in December.”

In October UK retail sales edged up by 0.6%, but fashion lagged behind as the mild weather delayed winter purchases.

 By Just Style