End of 17-month run of falling shop inflation sparks warnings of price rises

November marked the end of a 17-month period of declining shop inflation, with indications that increasing costs for retailers will "inevitably" lead to higher consumer prices in time to come.

Shop prices are now at a 0.6% decrease compared to the previous year, but this is an increase from the 0.8% decline seen in October – showcasing the first instance in 17 months where inflation has ticked up over the previous month, according to the latest data from the BRC-NielsenIQ Shop Price Index.

While fresh food prices rose 1.2% from last November, compared to October's 1% rise influenced by items like seafood, which faces high winter import and processing expenses, and tea, amid continued impacts from subpar harvests in major production areas. Although coffee prices experienced a brief reduction, global bean prices are nearing record peaks, and overall food inflation slowed modestly to 1.8%, down from 1.9% in October.

Prices for non-food items continue to display deflationary trends, being 1.8% less costly than a year ago although rising somewhat from the 2.1% lower figure of October, even as several retailers curtailed discounting. Despite this, significant deals persisted across various categories such as fashion, furniture, and electrical goods during early Black Friday promotions.

BRC chief executive Helen Dickinson remarked, "November was the first time in 17 months that shop price inflation has been higher than the previous month, albeit remaining overall in negative territory."

She added: "With significant price pressures on the horizon, November’s figures may signal the end of falling inflation."

The sector is bracing for a £7 billion hike in costs in 2025, driven by changes to employers' national insurance contributions, business rates, a minimum wage increase, and a new packaging levy. According to Mike Watkins, head of retailer and business insight at NielsenIQ, "Shoppers are still being cautious by shopping savvy for the essentials and holding back their discretionary spend, so the lower level of inflation should help sentiment ahead of Black Friday promotions."