Shop price inflation predicted to remain elevated in 2026

The British Retail Consortium has warned that shop price inflation is likely to remain elevated into 2026 as retailers face ongoing labour, logistics and compliance costs.

Latest data shows that shop price inflation picked up to 0.7% year on year in December, against growth of 0.6% in November. This is in line with the 3-month average of 0.7%. Non-Food inflation decreased to -0.6% year on year in December, against a decline of -0.6% in November. This is in line with the 3-month average of -0.6%. Whllst food inflation increased to 3.3% year on year in December, against growth of 3.0% in November. This is in line with the 3-month average of 3.3%.

Helen Dickinson, Chief Executive of the British Retail Consortium,  said “Shop price inflation edged up in December as food prices rose at a faster rate. Nonetheless, shoppers still found plenty of value across many Christmas essentials, including vegetables, cheeses, and alcohol, helping households to enjoy the festive season. Promotions were also widespread across popular gifting categories, including toys, books, and home entertainment.

“This year, retailers will continue to do all they can to keep prices down. While falling energy prices and improved crop supply should help ease some cost pressures, increased public policy costs and regulation will likely keep inflation sticky. 2026 must be the year that the Government works with business to create a policy environment that reduces the pressures bearing down on the industry. This will enable retailers to invest more in keeping their prices down, benefitting households all across the country.”

Mike Watkins, Head of Retailer and Business Insight, NIQ, said “This Christmas, shoppers remained cautious, prioritising affordability. Retailers worked hard to encourage spending by keeping supply chain price increases to a minimum, and many food retailers reduced prices in December to support demand. Looking ahead to 2026, although inflation has peaked, weak shopper sentiment is likely to persist, so shoppers will continue to seek out lower prices and promotional offers.”