Inflation in the UK — or at least the prices consumers pay for goods when shopping rather than there household costs — continues to fall. But there are small signs that the trend could be reversing with the measures announced in last month’s Budget potentially pushing prices higher.

The British Retail Consortium-NielsenIQ Shop Price Index released on Tuesday showed that in the first week of November, year-on-year shop price inflation was actually deflation and was at -0.6%. But this was ‘up’ from deflation of -0.8% in the previous month. Shop price year-on-year growth remained its lowest rate since September 2021. But compared to the previous month, shop price inflation was 0.2% having been 0.1% in October.

Food appeared to be the major culprit for the change with year-on-year inflation at 1.8% and at 0.3% month-on-month. Non-foods, meanwhile, remained squarely in deflation year-on-year at -1.8%. But month-on-month non-food shop prices rose 0.2% compared to 0.1% in October.

Ok, we’re not exactly talking about the rampant inflation that characterised the immediate post-pandemic period. But Helen Dickinson, chief executive of the BRC, said that November was the first time in 17 months that shop price inflation has been higher than the previous month, albeit remaining overall in negative territory. 

“With significant price pressures on the horizon, November’s figures may signal the end of falling inflation,” she said. And she placed the blame for any future price rises squarely on the government’s shoulders: “The industry faces £7 billion of additional costs in 2025 because of changes to Employers’ National Insurance Contributions, business rates, an increase to the minimum wage and a new packaging levy. Retail already operates on slim margins, so these new costs will inevitably lead to higher prices. If the government wants to prevent this, it must reconsider the existing timelines for the new packaging levy, while ensuring any changes to business rates offer a meaningful reduction for all retailers as early as possible.”

Mike Watkins, Head of Retailer and Business Insight, NielsenIQ, focused more on the past month and immediate future, saying: “Shoppers are still being cautious by shopping savvy for the essentials and holding back their discretionary spend, so the lower level of inflation should help sentiment ahead of Black Friday promotions. And with lower inflation than this time last year, many food retailers are extending offers and discounts to help sales momentum in December.”