UK retail prices were the lowest in November but not enough to end a 17-month fall in UK retail prices as traders warn of rising consumer prices.
According to the latest data from the British Retail Consortium (BRC)-NielsenIQ Shop Price Index, overall shop prices were down 0.6% in November compared to last year. Although this represents a decrease from October’s 0.8% year-on-year drop, it is the first time in 17 months that retail inflation has increased month-on-month. This change in trend indicates the possibility of higher consumer prices in the coming months.
Fresh food prices saw a moderate increase, rising by 1.2% compared to November 2023, up from 1% in October. Key drivers on the rise include seafood, which faces higher import and processing costs during the winter months, and tea, which has been hit by poor harvests in producing areas. Coffee prices, meanwhile, dipped slightly but are expected to rise again as global bean prices are near record highs. Despite this, food inflation decreased to 1.8% in November, from 1.9% in October.
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Prices of non-food products, however, continued to decline, falling 1.8% year-on-year, although this was an improvement from October’s fall of 2.1%. Retailers have been slowing their discounting process, but bargains continued to be found in categories such as fashion, furniture, and electronics, with many retailers offering early Black Friday deals.
BRC chief executive Helen Dickinson said November’s figures showed a turnaround, saying: “November was the first time in 17 months that retail inflation was higher than the previous month, although it was still in negative territory.
“With the current cost pressures, the November figures may signal the end of the downward spiral of inflation.
“The industry faces a £7bn increase in costs by 2025 due to changes to employers’ national insurance, business rates, increases to the minimum wage and a new packaging tax.
“Retail already operates on smaller channels, so these new prices will cause prices to rise.”
Mike Watkins, head of marketing and business insight at NielsenIQ, noted that consumers remain wary, with many placing high value on purchases while resisting discretionary spending.
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He said: “Consumers are still cautious about buying information on essentials and controlling their spending needs, so lower inflation should help sentiment ahead of Black Friday.