UK Retailers Warn of Rising Prices as 17-Month Deflation Trend Ends

Higher business costs from tax changes and wages are expected to reverse falling shop prices, pressuring consumers and businesses alike.

Shop prices fell by 0.6% in November compared to a 0.8% drop in October, marking the first increase in the rate of shop inflation in 17 months, according to the British Retail Consortium (BRC).
Retailers face £7 billion in additional costs due to higher employer National Insurance contributions, increased minimum wages, business rates, and a new packaging levy, with many warning these will lead to inevitable price hikes.
Fresh food prices rose by 1.2% year-on-year in November, driven by higher costs for seafood and tea, while non-food items saw slower deflation as retailers reduced discounting ahead of Black Friday.
Household disposable incomes declined in October, with rising energy prices and inflation expected to dampen consumer spending during the holiday season.
The Bank of England revised inflation forecasts upward for 2025 and 2026 following the Chancellor’s Budget, with concerns that public spending and tax changes could further stoke inflation.