High Food Prices Persist Despite Inflation Falling to 3.2%
- Dec 17, 2025
- 3 min read
The cost of food remains stubbornly high in the UK although inflation has dropped to its lowest level for eight months on the back of easing prices for food, alcohol, and clothing.
The Consumer Price Index (CPI) fell to 3.2% in the 12 months to November, down from 3.6%, according to new figures from the Office for National Statistics (ONS).
With inflation now seen to have peaked, the figure marks the lowest level since March and a bigger fall than the 3.5% than economists anticipated, although above the Bank of England’s 2% target.
A slowdown in the prices of food, alcohol, and clothing contributed to the lower rate, fuelled by pre-Christmas food price cuts and Black Friday offers.
Food and non-alcoholic beverages prices eased to 4.2% in the 12 months to November 2025, down from 4.9% in the 12 months to October.
On a monthly basis, food and non-alcoholic beverages prices fell by 0.2% in November 2025, compared with a rise of 0.5% a year ago.
Restaurant and hotel prices rose at 3.5%, compared with 3.8% in the year to October.
Food prices still remain higher than this time last year, pointed out Karen Betts, Chief Executive, The Food and Drink Federation (FDF).
“It's good to see food inflation starting to fall, not least as shoppers fill their cupboards for the festive season. Nonetheless, food prices remain higher this Christmas than last and many consumers are having to make tough choices about what they buy this year.”
The government needs to go further in its support of food businesses who continue to face significant cost pressures, added Betts.
“To really impact this persistent food inflation, we need Government to redouble efforts with food businesses to reduce costs, like energy, and boost growth and productivity to bring down prices in the coming weeks and months across the food and drink supply chain,” she Betts.
Dr Kris Hamer, Director of Insight at the British Retail Consortium, agreed, adding: “While retailers are trying to offer their customers great value in the run up to Christmas, Government imposed costs including the recent packaging tax, has made this increasingly difficult,” he said.
“Looking ahead to next year, it is vital that Government works with industry to create a policy environment that eases the cost and regulatory burden on the industry and allows retailers to invest more in both their prices and customer experience,” added Dr Hamer.
Interest Rate Cut Expected As Economy Shrinks
The inflation slowdown means the Bank of England is widely expected to cut interest rates from 4% to 3.75% on Thursday 18 December in an effort to stimulate the economy.
Three further interest rate cuts have been suggested for next year.
Just last week the ONS published data indicating that the UK economy shrank by 0.1% in the three months to the end of October.
Labour Market Under Strain
Other official figures released this week show unemployment in the UK has risen to the highest level for almost five years, reaching 5.1%.
Jobs cuts and hiring freezes have come on the back of rising employment wages, taxes, and other growing costs amid business uncertainty.
The number of UK payrolled employees fell by 149,000 in the year to October 2025, with a decrease of 22,000 between September and October 2025 alone.
Young people are worst affected, as the number of unemployed 18 to 24-year-olds increased by 85,000 in the three months to October, the largest rise since November 2022.
“The unemployment rate edged up to 5.1% in the three months to October with younger workers bearing the brunt of the slowdown in labour market activity as youth unemployment increased to 16%,” said Yael Selfin, Vice Chair and Chief Economist at KPMG in the UK.
“The prospects for a rebound in hiring activity for younger workers remain weak, particularly with the National Living Wage set to rise by 8.5% from April 2026 for 18–21-year-olds,” Selfin added.
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