BRC warns of 2025 headwinds despite lower Xmas inflation
During the period, shop price deflation was at 1%, having risen from 0.6% in the previous month
Consumers benefited from lower inflation for the week to 7 December 2024, according to the latest BRC-Nielsen IQ Shop Price Index, yet the British Retail Consortium anticipates fresh headwinds for the new year.
The later timing of Black Friday in 2024 meant that the first week of December included the final days of the Black Friday discounting period, including Cyber Monday, while the Black Friday discounting period had already passed in the same period a year earlier.
As a result, non-food prices are likely to appear more deflationary than the underlying trend.
During the period, shop price deflation was at 1%, having risen from 0.6% in the previous month. This was found to be slightly above the three-month average rate of -0.8%.
The non-food category remained in deflation at -2.4% in December, edging down from -1.8% in the preceding month. This was below the three-month average rate of -2.1%.
Food inflation was unchanged at 1.8%, and was in line with the three-month average rate of 1.8%. The annual rate had eased “considerably” since the start of the year and inflation remained at its lowest rate since December 2021.
Helen Dickinson, chief executive of the BRC, said: “Retailers discounted heavily for Black Friday this year as they attempted to make up for weaker sales earlier in the year. However, the later Black Friday timing brought many of the non-food discounts into the measurement period, making non-food prices look more deflationary than the underlying trend.
“As retailers battle the £7bn of increased costs in 2025 from the Budget, including higher employer NI, National Living Wage, and new packaging levies, there is little hope of prices going anywhere but up. The government can still take steps to mitigate these price pressures, and it must ensure that its proposed reforms to business rates do not result in any stores paying more in rates than they do already.”
Mike Watkins, head of retailer and business insight at NielsenIQ, added: “During December, shoppers benefited from both lower inflation than last year and bigger discounts as both food and non-food retailers were keen to drive sales after a slow start to the quarter. However, higher household costs are unlikely to dissipate anytime soon so retailers will need to carefully manage any inflationary pressure in the months ahead.”
