Food inflation has risen to its highest rate on record, accelerating to 13.3% last month, the latest figures from the BRC-Nielsen Shop Price Index have shown.
This was up from 12.4% in November and above the 12.5% three-month average rate, the data covering December 1-7 showed.
Fresh food inflation rose from 14.3% in November to 15% in December, the highest rate on record for the category, while the ambient food segment saw inflation rise at its fastest rate, jumping to 11% in December, up from 10% in November, and a quarterly average rate of 10.2%.
Shop price annual inflation remained at near record highs despite a slowing to 7.3% in December, down from 7.4% the previous month but above the three-month average rate of 7.1%.
Non-food inflation decelerated to 4.4% in December, down from 4.8% in November.
BRC chief executive Helen Dickinson said: “Non-food price rises eased as some retailers used discounting to shed excess stock built up during the disruptions to supply chains, meaning some customers were able to bag bargain gifts.
“The combined impact was that price increases overall plateaued, with the reduction in non-food inflation offsetting the higher food prices.”
She added that Christmas was challenging for many households across the UK as the cold snap forced people to spend more on their energy bills, but the prices of many essential foods rose as “reverberations from the war in Ukraine continued to keep high the cost of animal feed, fertiliser and energy”.
“2023 will be another difficult year for consumers and businesses as inflation shows no immediate signs of waning,” she warned.
“Retailers will continue to work hard to support their customers and keep prices low. However, further high investment in prices may no longer be viable once the government’s energy bill support scheme for business expires in April. Without the scheme, retailers could see their energy bills rise by £7.5bn. The government must urgently provide clarity on what future support might look like or else consumers might pay the price.”
NielsenIQ head of retailer and business insight Mike Watkins 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.”
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