British retailers increased prices at a faster pace last month and may find it difficult to avoid further rises in 2026 as cost pressures continue, the British Retail Consortium (BRC) said on Tuesday.
Annual shop price inflation edged up to 0.7% in December, slightly higher than the 0.6% recorded in the year to November, but broadly in line with the three-month average, according to the BRC.
Food price inflation rose to 3.3% year on year in December from 3.0% in November, while prices for non-food items continued to fall, declining by 0.6% for a second consecutive month.
“This year, retailers will continue to do all they can to keep prices down,” said BRC chief executive Helen Dickinson. She added that although lower energy costs and improved crop supplies should help ease some pressures, higher public policy costs and increased regulation are likely to keep inflation stubborn.
Employers are also facing rising labour costs, with Britain’s minimum wage set to increase by 4.1% in April to £12.71 an hour ($17). Staff costs were already pushed higher by finance minister Rachel Reeves’ first budget in October 2024.
The Bank of England is keeping a close watch on food prices, believing they play an important role in shaping public inflation expectations. Britain’s overall consumer price inflation rate eased to 3.2% in November.
