The British Retail Consortium (BRC) has today (Wednesday, January 4) said that inflation, particularly food inflation, is set to continue into 2023.
The trade association said that food inflation accelerated “strongly” to 13.3% in December, up from 12.4% in November, to see the highest inflation rate in the food category on record.
Helen Dickinson, the chief executive of the BRC, said: “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 businesses expire 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.”
Fresh food inflation also rose to 15% in December, up from 14.3% in November to see the highest inflation rate in the category on record.
The BRC said that ambient food inflation had the fastest rate of increase on record as it rose to 11% in December, up from 10% in November.
The impacts of a ‘challenging Christmas’
Dickinson said that many families across the UK experienced a “challenging Christmas” in 2022, due to inflation and the cost-of-living crisis.
“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,” she said.
“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.”
Head of retailer and business insight at NielsenIQ, Mike Watkins, predicted that consumer demand will be weak in the first quarter of the year due to the impact of energy price increases and the impact of Christmas spending bills.
He said that 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.”
