New data reveals that shop price inflation in the UK increased in December, driven primarily by a continued surge in the cost of food, which placed further strain on household finances during the festive period.
Food Costs Outpace General Inflation
According to the latest figures published by the British Retail Consortium (BRC) and NIQ, food inflation accelerated to 3.3% in December, up from 3% in November. This rate significantly outstripped the broader measure of shop price inflation, which stood at just 0.7%.
The situation was even more pronounced for fresh food, where inflation climbed to 3.8%, a rise from November's 3.6%. However, this fresh food figure remained slightly below the three-month average of 3.9%.
Deflation Persists in Non-Food Categories
In contrast to the rising cost of groceries, prices for non-food items continued to fall. Deflation in this category held steady at 0.6%, aided by widespread promotional activity across popular Christmas gifting sectors. Shoppers were able to find significant discounts on items such as toys, books, and home entertainment products.
BRC chief executive Helen Dickinson noted that while food prices rose at a faster rate, consumers still discovered good value on many festive essentials. "Shoppers still found plenty of value across many Christmas essentials including vegetables, cheeses, and alcohol, helping households to enjoy the festive season," she said.
Retail Challenges and Consumer Sentiment for 2026
Looking forward, industry leaders have issued a cautious outlook for the year ahead. Helen Dickinson stated that retailers are committed to keeping prices low but warned of ongoing pressures. "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," she explained.
Mike Watkins, Head of Retailer and Business Insight at NIQ, highlighted the cautious mindset of shoppers during Christmas 2025. "This Christmas, shoppers remained cautious, prioritising affordability," he said. He credited retailers with working hard to minimise supply chain price increases, with many food retailers actively cutting prices in December to stimulate demand.
Watkins added a sobering prediction for the new year: "Looking ahead to 2026, although inflation has peaked, weak shopper sentiment is likely to persist, so shoppers will continue to seek out lower prices and promotional offers." This suggests that the hunt for value will remain a dominant theme for UK consumers.
