UK Shop Price Inflation Rises Amidst Increasing Food Costs

In December 2025, the UK experienced a rise in shop price inflation, which increased to 0.7% year-on-year, up from 0.6% in November. This marks the first acceleration in three months, primarily driven by higher food costs during the holiday season. Food inflation rose to 3.3%, compared to 3.0% in November, with fresh food prices seeing a notable increase to 3.8% from 3.6%. In contrast, non-food items continued to decline, maintaining a deflation rate of 0.6% year-on-year, unchanged from the previous month.

UK Shop Price Inflation Inches Higher in DecemberReutersShop price inflation driven up by rising food costs

The British Retail Consortium (BRC) highlighted that while falling energy prices and improved crop supply could alleviate some cost pressures, increased public policy costs and regulations are likely to keep inflation persistent. BRC Chief Executive Helen Dickinson stated, “This year, retailers will continue to do all they can to keep prices down.” The upcoming increase in Britain's minimum wage by 4.1% to £12.71 ($17) per hour in April 2026 is expected to further raise employers' costs, compounding the inflationary pressures.

ReutersUK food prices and shop price inflation pick up at end of 2025: surveyShop price inflation driven up by rising food costs

Despite the rising food prices, Dickinson noted that shoppers found good value in many Christmas essentials, including vegetables, cheeses, and alcohol, which helped households enjoy the festive season. Mike Watkins, head of retailer and business insight at NIQ, observed that consumer sentiment remained cautious, with shoppers prioritizing affordability. Retailers responded by minimizing supply chain price increases and offering promotions to encourage spending during the holiday period.

Shop price inflation driven up by rising food costsUK Shop Price Inflation Inches Higher in DecemberUK food prices and shop price inflation pick up at end of 2025: survey

The Bank of England is closely monitoring food prices, recognizing their significant role in shaping public inflation expectations. The BRC's analysis indicates that while inflation has peaked, weak shopper sentiment is likely to persist, prompting consumers to seek lower prices and promotional offers in the coming year.

Shop price inflation driven up by rising food costs

Some analysts argue that the persistent inflation, particularly in food prices, could strain household budgets further, especially as the cost of living continues to rise. Critics suggest that the government's policies may not adequately address the underlying issues contributing to inflation, such as supply chain disruptions and rising operational costs for retailers.

Shop price inflation driven up by rising food costs

Looking ahead to 2026, the BRC anticipates that retailers will face ongoing challenges in managing costs while trying to maintain competitive pricing. The combination of rising wages, regulatory costs, and fluctuating food prices will likely shape the retail landscape in the coming months, as businesses adapt to changing economic conditions.

Reuters

• “ She said: “This year, retailers will continue to do all they can to keep prices down.” — Helen Dickinson, Chief Executive, British Retail Consortium

Shop price inflation driven up by rising food costs

• “ Mike Watkins, head of retailer and business insight at NIQ, said: “This Christmas, shoppers remained cautious, prioritising affordability.” — Mike Watkins, Head of Retailer and Business Insight, NIQ

Shop price inflation driven up by rising food costs

• “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.” — Helen Dickinson, Chief Executive, British Retail Consortium

Reuters