UK shop inflation cooled in November but prices likely to rise in 2026, BRC says

LONDON, Dec 2 (Reuters) - British store chains last month reported lower inflation in the run up to Black Friday sales but higher costs in 2026 mean retailers might struggle to keep inflation on its downward path, the British Retail Consortium said on Tuesday.

Annual shop price inflation of 0.6% in the 12 months to November followed a 1% rise in the 12 months to October, the BRC said.

Food inflation fell to 3% in November from 3.7%, with fresh food prices dropping by the most since December 2020, although prices for other items including oils, and meats and fish continued to accelerate as producers passed on higher costs to consumers.

The Bank of England is watching food prices closely as it believes they have a big role in shaping public inflation expectations. Britain's headline inflation rate fell to 3.6% in October.

Prices of non-food items fell by 0.6%.

The BRC said retailers kicked off Black Friday deals earlier than expected. But official data published ahead of finance minister Rachel Reeves' budget showed a drop in retail sales and consumer confidence in October.

"With Budget uncertainty behind us, retailers are hoping that consumer confidence rebounds in this crucial trading period and they will continue doing everything they can to keep prices down and help customer' money go further this Christmas," Helen Dickinson, Chief Executive of the BRC, said.

"Headwinds in the new year include rising employment costs which are likely to filter through to prices. This could shake already weak consumer confidence and present further challenges for consumers in the year ahead."

Britain's food retailers have said that higher employer taxes and regulatory costs as well as increased staff wages, ordered by Reeves in her first budget in October 2024, are adding to inflationary pressure from higher prices for commodities.

Reeves announced more than 26 billion pounds in tax rises on November 26 that will take more money from workers, people saving for a pension and investors.

(Reporting by Suban Abdulla, editing by Andy Bruce)