UK store chains increased their prices at a faster pace last month, and they may face challenges in keeping prices down in 2026 due to rising costs, the British Retail Consortium (BRC) said.
Annual shop price inflation rose to 0.7% in December, slightly above November’s 0.6% increase, though it matched the three-month average. Food prices rose 3.3% year-on-year, up from 3.0% in November, while non-food prices fell by 0.6%, unchanged from the previous month.
BRC Chief Executive Helen Dickinson said retailers will continue efforts to control prices, but rising public policy costs and regulation could keep inflation high, even as falling energy prices and improved crop supplies ease some pressure.
The UK’s minimum wage will rise by 4.1% to £12.71 ($17) an hour in April, adding to staff costs, which were already affected by Finance Minister Rachel Reeves’ October 2024 budget. The Bank of England is closely monitoring food prices, which influence public inflation expectations. Overall UK consumer price inflation fell to 3.2% in November.
Data from the Bank of England shows UK consumer borrowing surged by £2.08 billion ($2.79 billion) in November, the largest increase since November 2023, indicating strong household demand ahead of the finance minister’s budget.
October saw a smaller increase of £1.713 billion, while the annual growth rate of consumer credit reached 8.1%, the fastest since May 2024. UK economist Alex Kerr noted that speculation about tax rises ahead of November’s Budget did not significantly affect household spending decisions.
