BRC Shop Price Inflation Boosted by Food Costs

UK DEC BRC SHOP PRICE INDEX +0.3% M/M; NOV +0.9% M/M

UK DEC BRC SHOP PRICE INDEX +7.3% Y/Y; NOV +7.4% Y/Y

• Only moderate slowing in shop prices was recorded in the BRC's December survey, which saw annualised prices ease by a marginal 0.1pp to +7.3% y/y, holding near record highs. Yet prices accelerated by a softer +0.3% m/m (vs +0.9% in Nov).
• Food drove the December increase, as prices continued to soar into year-end, up +1.1% m/m and reaching a fresh series high of +13.3% y/y (vs +12.4% y/y in Nov).
• Ex. food, prices stalled on the month and cooled by 0.4pp to +4.4% y/y. As such, non-food shop prices appear to be beyond peak inflation, in line with CPI expectations.
• Demand weakened into year-end in the UK, as persistently high inflation paired with a cold snap which saw increased heating bills were felt by consumers. As such, the (seasonally adjusted) national December retail sales data due Jan 20 is likely to record another month of contraction, with retail panning out to have a negative contribution to Q4 GDP.