The latest data reveals that food costs surged in December 2025, resulting in increased shop price inflation. According to the British Retail Consortium (BRC) and NIQ, food inflation reached 3.3 percent in December, up from 3 percent in November. This rise in food prices was driven primarily by fresh produce, which saw inflation increase to 3.8 percent from 3.6 percent the previous month.
This food inflation rate is just below the nine-month average of 3.9 percent, contrasting sharply with overall shop price inflation, which stood at 0.7 percent. In light of these developments, Helen Dickinson, chief executive of the BRC, emphasized the challenges retailers face, stating, “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.”
The rising cost of food has significantly impacted consumer sentiment. A recent survey conducted by KPMG found that 81 percent of respondents who felt the UK was deteriorating cited grocery costs as their primary concern. As the country anticipates Rachel Reeves’ second Autumn Budget, leaders from major supermarkets, including Tesco, Lidl, and Morrisons, have urged the Chancellor to take action against inflation, warning that “high food inflation is likely to persist into 2026” due to ongoing industry costs.
Mike Watkins, head of retailer and business insight at NIQ, noted that “weak shopper sentiment” is expected to continue throughout 2026, even with inflation projected to have peaked. Despite these pressures, customers experienced a slight reprieve during the festive season, as non-food product deflation steadied at 0.6 percent. Overall, the inflation rate fell to 3.2 percent, a drop from 3.6 percent in November, which exceeded analysts’ expectations but remained significantly above the Bank of England’s target of 2 percent.
The Office for National Statistics indicated that food prices were the leading factor in this inflationary environment, highlighting decreases in the costs of cakes, biscuits, and breakfast cereals. Nevertheless, certain items saw significant price increases, with beef prices soaring 27.7 percent year-on-year, followed by chocolate at 17.3 percent and milk at 14.8 percent.
As retailers navigate these challenging economic conditions, the impact on consumer behavior and spending will likely continue to evolve in the coming months. The persistent inflation in food prices underscores the ongoing economic challenges faced by households across the UK.
