Grocery inflation at 4.3 per cent despite fall in prices

Shop prices continued to rise at 4.3 per cent in December as a price rise on non-food items offset easing costs on food, shows latest data, amid retailers’ warning that new border checks on EU goods entering the UK, which are due to begin from April, could further push up prices.

The increase in the price of goods in stores compared with a year ago was the same rate of inflation as in November and came after several months of easing. Food price inflation decelerated to 6.7 per cent in December – the lowest level since June 2022 and down from 7.7 per cent in November – helped by falls in the price of wine, port and sherry before Christmas. Fresh food inflation also fell to 5.4 per cent in December from 6.7 per cent in the previous month.

The overall rise in prices came despite widespread discounting on the high street as retailers tried to clear stocks of clothing after a mild autumn.

Mike Watkins, the head of business insight at analysts NielsenIQ, said promotions on food were at a four-year high as there was “a lot of pressure on discretionary spend” as households struggled with higher bills on essentials such as energy and petrol.

With families closely watching their budgets, supermarkets battled to win over the big Christmas shop by offering discounts on key festive meal items, from sprouts to turkeys. Bags of carrots and other veg could be bought as cheaply as 15p in the week before Christmas.

From Jan 30, 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.

Helen Dickinson, the chief executive of the British Retail Consortium trade body that represents most big retailers, said, “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.

“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.”

Analysts have also warned that the rise in the legal minimum wage, due to come in from April, will also keep up pressure on prices.

Dickinson said non-food products had a “challenging December” with price inflation rising to 3.1 per cent from 2.5 per cent in November as prices bounced back after Black Friday discounts and before the January sales.