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Christmas squeeze as food prices reach four-year high

Laura Onita
Feeling the pinch: consumers face a tough festive season as they battle with the inflation damage to their wallets: PA Wire/PA Images

Supermarkets are hiking prices at the fastest rate for four years, official figures revealed on Theusday.

The inflation squeeze on consumer wallets was underlined by the latest retail sales data from the Office for National Statistics.

That showed average price rises of 3.6% among food stores, the biggest jump since September 2013.

The volume of goods bought fell slightly, down 0.1% year on year in November, the ONS said.

The data comes after official inflation figures showed the overall rise in the cost of living hitting a five-year high of 3.1% over the month, triggered largely by the post-Brexit fall in the pound.

But Black Friday also lured shoppers, with electrical goods driving a 1.1% rise in retail sales over the month, the ONS added.

Howard Archer, chief economic adviser to the EY Item Club, said: “On the face of it November’s robust retail sales performance bodes well for Christmas sales this year and for GDP growth in the fourth quarter.

“However, a key factor for retailers will be to what extent the Black Friday promotions just brought forward sales from December rather than boosted overall sales.”

Other experts added that consumer confidence was still fragile, while judging the uncertain path of Brexit made the Bank of England’s job setting interest rates much more difficult next year.

ING’s James Smith said: “Consumer confidence is still as low as it was in the immediate aftermath of the Brexit vote, and with early signs the jobs market is going through a rough patch, shoppers are likely to remain wary.

“This gives the Bank of England a conundrum. The increased likelihood of a swift transition deal agreement in the first quarter could see some investment return, although there are still some big Brexit questions looming in 2018.”