UK food inflation drops as grocers compete for Christmas sales
FOOD inflation in United Kingdom stores fell sharply in December to its lowest level in more than a year as supermarkets competed on price to attract Christmas shoppers.
The British Retail Consortium (BRC) said on Tuesday (Jan 2) that food inflation slowed to 6.7 per cent last month, down from 7.7 per cent in November. The figure has fallen for the eighth month in a row to the lowest since June 2022.
The numbers, which cover Dec 1 to 7, will give more encouragement after the Office for National Statistics reported slower-than-expected consumer price inflation last month, stoking bets that the Bank of England will start cutting interest rates from May. Higher food costs have been a major driver of inflation in the UK and shoppers have adapted by buying own-label goods and frequenting discount grocers.
Many supermarkets lowered prices on traditional festive vegetables, including potatoes, sprouts and carrots, to below 20 pence (S$0.34) in the final week before Christmas to pull in shoppers. Wine, port and sherry fell in price last month, according to the BRC.
Promotions in food retail reached the highest in four years in December, said Mike Watkins, head of retailer and business insight at NielsenIQ, which produces the data for the BRC.
Headwinds may prevent retailers from cutting prices as much as they had hoped in 2024, the BRC said. Businesses will have to grapple with a large increase to the national living wage from April along with higher business rates and new European Union border checks.
Disruption in the Red Sea is also weighing on retailers as some containers are forced to re-route around the Cape of Good Hope.
“Retailers will continue to do all they can to keep prices down in 2024, but there are obstacles on the road ahead,” said Helen Dickinson, chief executive officer of the BRC. BLOOMBERG
Share with us your feedback on BT's products and services
