Shoppers’ ability to afford Christmas treats has been put under threat as retailers warned November could mark a turning point for inflation, with the recent fall in prices slowing amid increased fresh produce costs and fewer discounts on the shelves.
Shop prices fell by 0.6% in November, compared with a fall of 0.8% in October, according to the latest report from the British Retail Consortium (BRC) and research firm NielsenIQ. The slowdown in deflation was driven by non-food goods and a slight increase in fresh food prices, including seafood.
It emerged alongside evidence that household disposable incomes fell for only the second time this year in October – by £1.98 – as higher energy prices pushed up household bills, according to the latest Asda Income Tracker.
The Centre for Economics and Business Research (CEBR), which produces the tracker for the supermarket, predicted that households will face “dampened spending power over the festive period”. It said the rising cost of essentials would be particularly concerning for households on lower incomes.
“With significant price pressures on the horizon, November’s figures may signal the end of falling inflation,” Helen Dickinson, the chief executive of the BRC, which represents most major retailers.
“The 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.”
Comments