Prices set to rise in 2022 as retailers struggle to absorb cost pressures

Annual shop prices rose by 0.8 per cent in December, compared with a decrease of 0.3 per cent in November, the British Retail Consortium’s Shop Price Index showed.

Yearly non-food price deflation accelerated to 0.2 per cent in December, compared with 0.1 per cent in November. This marked a slower rate of decline than the 12- and six-month average price drops of 1.7 per cent and 0.9 per cent, respectively.

READ MORE: UK food inflation highest in 3 years

Meanwhile, year-on-year food prices showed their highest inflation rate since November 2020, with an annual increase of 2.4 per cent in December from 1.1 per cent in November. This is above the 12- and six-month average price increase of 0.3 per cent and 0.6 per cent.

The steepest increases were felt in fresh food, which rose in price by 3 per cent during December compared with the same month in 2020. It marked the sharpest rate of inflation in fresh food for almost 10 years.

The BRC data came as The Times’ annual survey of economists warned that inflation could surpass 7 per cent in 2022 to reach levels not seen in the UK since the 1990s.

Helen Dickinson, chief executive of the British Retail Consortium, said: “The trajectory for consumer prices is very clear: they will continue to rise, and at a faster rate. Retailers can no longer absorb all the cost pressures arising from more expensive transportation, labour shortages, and rising commodity and global food prices.

“Consumers will already be harder pressed this year, with rising energy bills, the looming hike in national insurance, and more expensive mortgages. Government should relieve some of these costs by looking for long-term solutions for resolvable issues such as labour shortages.”