The latest data points to a mixed end to 2025 for British shoppers. Although retailers offered widespread discounts during the festive period, the underlying cost of food kept the pressure on household finances. Rising prices in supermarkets have now become a central concern as families grapple with a higher cost of living.
At the same time, the modest increase in shop price inflation outside of food signals that consumer habits may be shifting. Retailers, aware of shopper fatigue, stepped up promotions and absorbed some costs to maintain sales levels during the holiday season.
Food Inflation Continues to Drive Pressure despite Promotional Efforts
According to the British Retail Consortium (BRC) and NIQ, shop price inflation rose to 0.7% in December, a slight increase from 0.6% the previous month. The overall rise was largely due to a jump in food inflation, which reached 3.3%, up from November’s 3.0%.
The data showed that fresh food prices climbed even higher, hitting 3.8%, compared with 3.6% the previous month. While this remains below the three-month average of 3.9%, it still reflects significant pressure on basic grocery items. In contrast, non-food prices declined by 0.6%, with retailers offering broad promotions on popular Christmas categories such as toys, books and entertainment.
Helen Dickinson, Chief Executive of the BRC, noted that while prices increased, consumers were still able to find value during the festive season. “Shoppers still found plenty of value across many Christmas essentials, including vegetables, cheeses, and alcohol, helping households to enjoy the festive season,” she said.
The shift in pricing patterns shows that retailers made a concerted effort to balance cost pressures with consumer affordability. Mike Watkins, Head of Retailer and Business Insight at NIQ, explained that while prices in some categories rose, retailers “worked hard to encourage spending by keeping supply chain price increases to a minimum” and actively reduced food prices in December to support demand.
Shopper Confidence Remains Subdued Heading into the New Year
Despite signs that inflation has peaked, overall shopper sentiment appears to be weak. Many consumers continue to prioritise affordability, focusing on essential items and promotional offers. According to the BRC, retailers expect this behaviour to persist into 2026.
Dickinson warned that while energy prices are falling and crop supplies are improving, other external factors could limit the pace of inflation easing. “Increased public policy costs and regulation will likely keep inflation sticky,” she said.
This view was supported by findings that, although non-food prices dropped, food prices remained high enough to offset those savings. The report also highlighted that shoppers leaned heavily on discounts to stretch their budgets during the Christmas season.
With households still facing financial constraints, retailers are expected to continue leveraging price cuts and promotions to attract spending. Watkins noted that while inflation may be easing, “shoppers will continue to seek out lower prices and promotional offers.”
Retailers are now calling on the government to play a more active role in reducing long-term cost pressures on the industry. Dickinson added that a more supportive policy environment would help stabilise the sector and ease financial strain on consumers. While the outlook for inflation may be gradually improving, the path to recovery remains uneven. British shoppers, especially those affected by rising food bills, are likely to remain cautious well into the year ahead.
