BRC-Nielsen Shop Price Index: UK grocery prices edge up

29 Jan 2020 --- Chief Executive of the British Retail Consortium (BRC), Helen Dickinson, has warned that UK grocery prices could rise further as last year’s increase in global food prices filters through to British shelves. However, she stresses that food prices remain low by European standards. She makes the comments as the latest BRC-Nielsen Shop Price Index for January 2020 shows that food costs have edged up.

January 2020 shop prices fell by 0.3 percent compared to a 0.4 percent decrease in December 2019. This is below the 12-month average of 0.0 percent and above the six-month average price decrease of 0.5 percent.

Food inflation accelerated to 1.6 percent in January, up from 1.4 percent in December. This is below the 12-month average price increase of 1.7 percent but above the six-month average price increase of 1.4 percent. 

Fresh Food inflation eased to 0.7 percent in January from 0.8 percent in December. This is below the 12- and six-month average price increases of 1.2 percent and 0.8 percent, respectively. Ambient Food inflation accelerated to 2.8 percent in January up from 2.4 percent in December. This is above the 12- and six-month average price increases of 2.4 percent and 2.3 percent, respectively, and the highest inflation rate since April 2019. 

Non-Food prices fell by 1.5 percent in January, the same rate of decrease as in December. This is below the 12-month average price decline of 1.0 percent and in line with the six-month average price decline of 1.5 percent. 

“Shoppers will cheer as non-food prices fell in January, a continuation of the long-term trend in retail. This was tempered by growth in food prices which accelerated to 1.6 percent, slightly above the six-month average,” says Dickinson. “Rising costs from business rates, minimum wage increases and the Apprenticeship Levy continue to put upward pressure on prices. When combined with fierce competition across the industry, margins are being steadily squeezed as retailers strive to keep prices low for consumers.” 

Promotions from UK retailers have returned to their usual levels following the festive season. However, there is strong competition in retail prices which is expected to continue. Also, it has been widely forecast that in the months following Brexit, food prices will likely face increases. 

Edited by Gaynor Selby