The latest CPI inflation figures reveal a rise to 2.6% in November 2024, up from 2.3% in October, according to data from the Office for National Statistics (ONS).
Kris Hamer, Director of Insight at the British Retail Consortium (BRC), attributed the increase primarily to higher fuel prices and costs in clothing and footwear.
“November’s figures were driven primarily by increased inflation rates of fuel and clothing and footwear,” Hamer noted. However, some relief came from deflation in furniture and household equipment, which, though less pronounced than October, offered a silver lining for early Christmas shoppers.
Housing and household services also contributed significantly, with their annual inflation rate climbing to 5.8%, up from 5.5% the previous month.
Within this category, owner-occupiers’ housing costs rose by 7.8%, marking the steepest increase since February 1992.
Food inflation remains moderate
Food inflation edged up slightly, reaching 2.0% in November from 1.9% in October. Shoppers benefited from falling prices in some meat categories, including pork, lamb, and beef, which softened the overall impact.
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Hamer acknowledged retailers’ efforts to contain costs during the festive period despite mounting pressures. “Retailers are doing their utmost to deliver an affordable Christmas for their customers in the face of global price pressures,” he said.
However, he warned that external challenges, such as higher employer National Insurance, the National Living Wage, and new packaging levies, have added £7 billion in operational costs for retailers, creating unavoidable financial strain.
Concerns over policy and high street viability
Retailers are closely monitoring proposed changes to business rates, which could exacerbate challenges for an industry already operating on slim margins.
“It is essential that [the government’s plan] leaves no store paying more in rates than before,” Hamer emphasised. He highlighted that preserving retail jobs and preventing further store closures depends on governmental support.
The report also pointed to long-term trends in the transport sector. While motor fuel prices fell by 10.9% annually, diesel and petrol experienced slight monthly increases of 1.4 pence and 0.8 pence per litre, respectively.
With inflationary pressures continuing, the retail industry faces a delicate balancing act between absorbing costs and maintaining competitiveness. Hamer concluded, “By protecting shops, the government can support retailers as they invest in keeping shops open and keeping prices down.”
This inflationary trend underscores the complexities of managing economic pressures in the run-up to the busiest retail season of the year.
