Credit, Collections & Insolvency News
Food inflation hit 13.3 per cent in December, up from 12.4 per cent in November, according to the British Retail Consortium (BRC) shop price index.
The rise marks the highest monthly inflation rate for food since records began in 2005. The data highlights that fresh food costs contributed most to the rise, which shows an increase of 15 per cent on an annual basis.
However, overall inflation in UK shops dipped in December, marking the first decline in over a year. The BRC said that shop price inflation fell to 7.3 per cent, down slightly from November’s record high of 7.4 per cent. The levelling off in prices overall was due to retailers heavily discounting stock in the run-up to Christmas to shift excess inventory.
UK food price rises soared to a record rate in December, figures show, as retail industry bosses warned that high inflation would continue in 2023 amid the fallout from surging energy bills. Highlighting the pressure on households during the festive shopping season, the industry snapshot showed the price of many essential foods rose sharply as the reverberations from Russia’s war in Ukraine continued to drive up energy costs.
The BRC said high prices for animal feed, fertiliser and energy fed into higher food prices on supermarket shelves, while warning that consumers would probably face further increases in 2023.
Helen Dickinson OBE, Chief Executive of the British Retail Consortium, said “It was a challenging Christmas for many households across the UK. Not only did the cold snap force people to spend more on their energy bills, but the prices of many essential foods also rose as reverberations from the war in Ukraine continued to keep high the cost of animal feed, fertiliser and energy. Non-food price rises eased as some retailers used discounting to shed excess stock built up during the disruptions to supply chains, meaning some customers were able to bag bargain gifts. The combined impact was that price increases overall plateaued, with the reduction in non-food inflation offsetting the higher food prices.”
“2023 will be another difficult year for consumers and businesses as inflation shows no immediate signs of waning. Retailers will continue to work hard to support their customers and keep prices low. However, further high investment in prices may no longer be viable once the Government’s energy bill support scheme for business expires in April. Without the scheme, retailers could see their energy bills rise by £7.5 billion. Government must urgently provide clarity on what future support might look like or else consumers might pay the price.”
Mike Watkins, Head of Retailer and Business Insight, NielsenIQ, said “Consumer demand is likely to be weak in Q1 due to the impact of energy price increases and for many, Christmas spending bills starting to arrive. So the increase in food inflation is going to put further pressure on household budgets and it’s unlikely that there will be any improvement in the consumer mind-set around personal finances in the near term. With shoppers having less money to spend on discretionary retail having paid for their essential groceries, there will be little to stimulate demand across the non-food channels.”