Shop price inflation in the UK climbed in late 2025, and industry experts warn that retail inflation and rising food prices will remain sticky into 2026 despite broader cost pressures easing in some areas.
According to the British Retail Consortium’s (BRC) latest data covering the period 1–7 December 2025, annual shop price inflation rose to 0.7 per cent year-on-year, up from 0.6 per cent in November and consistent with its three-month trend.
Go deeper with GlobalData
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
Food price inflation was a key driver, increasing to 3.3 per cent, while non-food prices continued to fall as retailers used discounting to support demand.
Industry leaders say retailers are under pressure to balance cost management with consumer demand for lower prices, leading to widespread promotional activity and cautious shopper behaviour.
Global retail professionals are watching for how sticky inflation and shop price trends will influence pricing strategies and cost management through 2026.
Shop price inflation and food cost pressures
The BRC’s shop price inflation data shows that rising food costs were the main factor behind the uptick in headline retail inflation at the end of 2025.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataOverall shop price inflation increased to 0.7 per cent year-on-year in December, largely driven by food price rises. Food inflation climbed from 3.0 per cent in November to 3.3 per cent, while fresh and ambient food categories also saw higher costs.
By contrast, non-food prices declined by 0.6 per cent, reflecting continued discounting and promotional activity by many retailers.
Helen Dickinson, chief executive of the BRC, said: “Shop price inflation edged up in December as food prices rose at a faster rate.” She noted that value remained across essential categories over the festive period, helping households manage spending despite rising food costs.
For the retail sector, food price inflation and shop price trends remain crucial metrics as they influence both consumer behaviour and broader inflation expectations.
Retailers’ view on inflation outlook and policy challenges
Retail leaders are calling attention to the complex mix of cost pressures that could keep inflation elevated through 2026.
While familiar drivers such as falling energy prices and improved crop supply could help relieve some cost burdens, other expenses are expected to persist.
Dickinson said: “This year, retailers will continue to do all they can to keep prices down. 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 urged collaboration between government and business to address regulatory and cost pressures to support price stability.
This reflects wider concerns within the industry that external factors — including labour cost increases and regulatory changes — could complicate efforts to rein in price inflation even as economic conditions evolve.
Shopper behaviour and demand for lower prices
The consumer response to changing price dynamics is shaping retail strategies as retailers attempt to stimulate demand amid caution around spending.
Mike Watkins, head of retailer and business insight at NIQ, commented on recent shopper trends:
“This Christmas, shoppers remained cautious, prioritising affordability. Retailers worked hard to encourage spending by keeping supply chain price increases to a minimum, and many food retailers reduced prices in December to support demand.”
Watkins added that despite inflation having peaked, weak shopper sentiment is expected to continue into 2026, driving demand for promotions and value offerings. “Looking ahead to 2026 … shoppers will continue to seek out lower prices and promotional offers,” he said.
Industry analysts say that patterns of retail price inflation and consumer demand will be important to monitor globally, as businesses refine pricing strategies in response to ongoing economic pressures.
