Inflation in UK shops jumps to highest level on record

PRICES in UK stores rose at their highest rate since at least 2005 in November, with Britons battling soaring costs in the run-up to Christmas.

The British Retail Consortium (BRC) said shop price inflation accelerated to 7.4% in November, a new record for the index which started in 2005, and up from 6.6% in October. Food price increases hit 12.4%, with meat, eggs, dairy and coffee under particularly heavy pressure. 

Shoppers are prioritising their spending on food and energy bills as the weather gets colder. Nearly half of UK consumers plan to spend less this holiday season, with a third buying cheaper gifts for friends and family, according to Ernst & Young. 

“Christmas cheer will be dampened this year as households cut back on seasonal spending in order to prioritise the essentials,” said BRC CEO Helen Dickinson. “Winter looks increasingly bleak as pressures on prices continue unabated.”

UK retailers started discounting earlier than usual this year to entice shoppers to spread out their Christmas spending. Department store John Lewis Partnership Plc and drugstore chain Boots both began offering seasonal deals beginning in early November. 

Transactions during Black Friday and Cyber Monday were up compared to last year, according to Barclaycard Payments data, but larger-than-normal discounts may mean margins will be squeezed. 

Rising food prices are forcing some consumers to skip meals while others turn to food banks. More than a quarter of UK households are struggling financially, twice as many as a year earlier, and the vast majority surveyed said that higher prices for food and beverages were a major concern, Kantar said earlier this month.

“The cost of Christmas will be higher this year and shoppers will be managing their budgets more closely than at any time since the start of cost-of-living crisis,” said Mike Watkins, head of retailer and business insight at NielsenIQ, which produces the data for the BRC. – Bloomberg