Yahoo Finance UK food inflation slows in December but risk of price increases looms
UK shop price inflation remained steady in December as food inflation to its lowest rate since June 2022 but price rises are at risk of accelerating again this year, retailers warn.
Annual food inflation slowed to 6.7% in December, down from 7.8% in November, marking the lowest level in 18 months, according to the British Retail Consortium (BRC).
Food prices fell sharply in December as discounters competed between each other to attract Christmas shoppers.
The BRC also reported an acceleration in non-food inflation to 3.1% in December, up from 2.5% in November. As a result, overall shop price inflation was unchanged at 4.3% in December.
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The BRC has warned that UK households could face higher grocery prices as new border checks for EU imports, and the rise in the corporate tax rate from April, are likely to drive up costs.
“Retailers will continue to do all they can to keep prices down in 2024, but there are obstacles on the road ahead [including] new border checks for EU imports, [and] hundreds of millions more on business rates bills from April,” Helen Dickinson, the chief executive of the British Retail Consortium trade body.
“Government should think twice before imposing new costs on retail businesses that would not only hold back vital investment in local communities, but also push up prices for struggling households.”
From 30 January, imports of items including some animal products, plants and plant products, and high-risk food of non-animal origin from the EU will require health certificates, followed by physical inspections of these goods at the UK border from the end of April.
Mike Watkins, the head of business insight at NielsenIQ, said promotions on food were at a four-year high as there was “a lot of pressure on discretionary spend”.
Meanwhile, discount supermarkets Aldi and Lidl have revealed record Christmas trading as cash-strapped shoppers looked to cut costs of their festive celebrations.
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German-owned Lidl claimed its best Christmas yet, reporting year-on-year UK sales growth of 12% in the four weeks to 24 December.
The supermarket said it saw 4.5 million more shoppers come through its doors and cheered its busiest ever trading day on Friday 22 December.
Rival Aldi said it also notched up record trading, with UK sales of more than £1.5bn for the first time in the four weeks to Christmas Eve.
The chain said sales lifted 8% year-on-year in the four weeks to 24 December.
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