Shoppers at British store chains last month saw the sharpest fall in prices in more than three years, but higher costs in 2025 means retailers might struggle to keep inflation on a downward trajectory, the British Retail Consortium (BRC) said on Tuesday.
Annual shop price deflation of 1% in the 12 months to December followed a 0.6% drop in the 12 months to November, according to the BRC.
It said the later timing of Black Friday in 2024 had distorted year-on-year comparison, with last month’s data including the final days of Black Friday and Cyber Monday sales, which were not included in the 2023 comparable period.
Inflation
Food inflation remained unchanged at 1.8% in December, its lowest level in three years.
Prices of non-food items fell by 2.4% – a bigger drop than November’s 1.8% increase.
Helen Dickinson, chief executive of the BRC, said the later timing of Black Friday sales made non-food prices look more deflationary than the underlying trend – something that was unlikely to last.
Dickinson added, “With food inflation bottoming out at 1.8% and many price pressures on the horizon, shop price deflation is likely to become a thing of the past.”
Dickinson said retailers would have to raise prices to combat higher employment costs, business rates and new packaging levies announced in finance minister Rachel Reeves’ first budget in October.
In November, the BRC and major UK retailers including Tesco and Marks & Spencer warned Reeves the retail industry faced a £7 billion rise in annual costs this year due to the changes, which could risk job losses and higher prices.
On Thursday, Tesco chief executive Ken Murphy said that Tesco alone will face additional costs of about £250 million a year from the hike in social security payments.
Read More: Black Friday Spending Lifts UK Retail Sales At End Of 2024 – BRC
