The impact of policy costs and regulation on retailers is expected to result in “sticky” inflation this year, trade body the British Retail Consortium has cautioned.

BRC chief executive Helen Dickinson signalled in the latest BRC-NIQ Shop Price Monitor that shop price inflation climbed to 0.7% year on year in December, compared to 0.6% in November.

 

Food inflation rose year on year to 3.3% in December, up from 3%  the previous month and in line with the three-month average of 3.3%.

Fresh food inflation jumped to 3.8% year on year, against growth of 3.6% in November, while ambient food inflation rose to 2.5% from 2.4%. Both were below their three-month averages of 3.9% and 2.6%, respectively.

The rate of non-food inflation was -0.6% year on year – the same as in November and the three-month average.

Dickinson said that shop price inflation edged up in December as food prices rose at a faster rate.

However, she added that shoppers still found value across “many Christmas essentials” including vegetables, cheeses, and alcohol, while promotions were widespread across “popular gifting categories, including toys, books and home entertainment.”

She said: “This year, retailers will continue to do all they can to keep prices down. While falling energy prices and improved crop supply should help ease some cost pressures, increased public policy costs and regulation will likely keep inflation sticky.

“2026 must be the year that government works with businesses to create a policy environment that reduces the pressures bearing down on the industry. This will enable retailers to invest more in keeping their prices down, benefiting households all across the country.”

NIQ head of retailer and business insight Mike Watkins said: “This Christmas, shoppers remained cautious, prioritising affordability. Retailers worked hard to encourage spending by keeping supply chain price increases to a minimum, and many food retailers reduced prices in December to support demand.

“Looking ahead to 2026, although inflation has peaked, weak shopper sentiment is likely to persist so shoppers will continue to seek out lower prices and promotional offers.”

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