Food inflation in the UK has slowed to its lowest rate since late 2021, with the latest data highlighting persistent high prices for items like seafood, tea, and coffee.
The British Retail Consortium (BRC) in partnership with NielsenIQ has revealed new data indicating a deceleration of food inflation to 1.8% in November, a slight decrease from 1.9% in October. This easing inflation might suggest relief for consumers, yet certain sectors continue to feel the strain of persistent high costs.
Fresh food inflation presents a contrasting picture, with a rise to 1.2% from 1% in the previous month. Products such as seafood remain particularly affected due to high import and processing expenses, notably during the winter season. Helen Dickinson, BRC Chief Executive, has noted the continued vulnerability of these categories.
Further complicating the situation, tea prices show no signs of abating due to underwhelming harvests in key areas. Meanwhile, coffee prices, after a brief respite, are anticipated to climb once more as global prices near historic peaks.
November additionally signified a new development in shop price inflation, which saw higher rates than previous months at 0.6% deflation compared to 0.8% in October. According to Mike Watkins from NielsenIQ, consumers are adjusting their spending habits, prioritising essentials while being cautious with discretionary purchases. This behaviour is influenced by lower inflation than in the preceding year and is expected to create positive sentiment just before major shopping events such as Black Friday.
On the horizon are significant cost pressures, with November’s data possibly marking a halt to declining inflation. The retail sector is preparing for approximately £7 billion in additional expenditure in 2025 due to upcoming increases in Employers’ National Insurance Contributions, business rates changes, a rise in the minimum wage, and a new packaging levy.
Retail bodies have expressed concern, warning of inevitable price hikes and potential job losses if the government does not adjust its timelines for these financial obligations. Recent appeals to Chancellor Rachel Reeves emphasised the gravity of the situation, with over 70 prominent companies participating in efforts to highlight these challenges.
As food inflation slows slightly, the ongoing pressures on seafood, tea, and coffee prices serve as a reminder of persistent economic challenges. The outlook remains uncertain, with looming cost increases threatening to reverse the gains seen from easing inflation.
