Cost of living: Fresh food prices rose at record rate pre-Christmas

Fresh food prices rose at a record rate in December, at a time when many families would have been stocking up for Christmas, new figures suggest.

Fresh food inflation hit 15% in December, up from 14.3% in November, according to the British Retail Consortium (BRC).

It marks the highest monthly inflation rate for fresh food since records began in 2005.

Prices have been pushed up by animal feed, fertiliser and energy costs.

Overall, inflation for food hit 13.3% in December, the retail body said.

However, prices for non-food items eased as retailers offered big discounts to shift stock, the retail industry body added.

The BRC looks at the change in prices of 500 everyday items every month.

Its chief executive, Helen Dickinson, also warned that this year is expected to be another difficult one for consumers and businesses as "inflation shows no immediate signs of waning".

Inflation is the rate at which prices are rising. The latest official data from the Office for National Statistics showed the rate dropped back slightly, but remains close to a 40-year high.

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New figures from market research firm Kantar on Wednesday also show that grocery sales hit £12.8bn in the four weeks to Christmas Day.

Mince pies and Christmas puddings proved popular, although Brussels sprouts were off the menu for some households as the proportion buying them fell to 45% from 48%.

Ged Futter, retail analyst and former senior buying manager at Asda, said Christmas dinner was always going to be more expensive, due to rising food prices.

"We've seen price rises, particularly in fresh food, for quite some time now," he told the BBC's Today Programme.

"It's all about feed, fertiliser and fuel, and all of last year they were going up," he added. "Fresh food shows no signs of those prices coming down."

He suggested food prices will remain high at the start of this year, before they finally start to fall.

Higher food and energy prices along with the arrival of Christmas spending bills mean shoppers will have less to spend on non-essential items in January, according to Mike Watkins, head of retailer and business insight at NielsenIQ.

Support for business

The BRC warned shoppers could be hit with even higher prices when the energy bill support scheme for businesses ends in April too.

It said that shop owners have been trying not to pass on record price rises to customers but may have no choice as bills are due to go up without future help.

The government fixed wholesale gas and electricity prices for firms for six months between October and March, but the Treasury said the scheme was being reviewed as it was "very expensive".

The BBC understands Chancellor Jeremy Hunt will meet with business groups at lunchtime on Wednesday to brief them on the government's plans for energy bill support after the current package expires.

Ms Dickson said retailers would continue to work hard to support their customers and keep prices low.

But this "may no longer be viable" as without the government's energy support scheme, retailers could see their bills rise by £7.5bn collectively, she said.

"Government must urgently provide clarity on what future support might look like or else consumers might pay the price," she added.

The Federation of Small Businesses (FSB), UK Hospitality, the CBI and the British Chambers of Commerce are all expected to attend a meeting with the chancellor on Wednesday.

The FSB said small firms "can't plan their 2023 without assurances".

Martin Greenhow of Mojo bars said firms needed to know 'months ago' whether government energy bill support would be extended

Meanwhile, UK Hospitality said it was "vital that this support is extended", and warned that without it, the industry was "facing a steep cliff-edge in April".

Martin Greenhow is the managing director of Voodoo Doll which has five cocktail bars called Mojo across the north of England.

He said his fixed-term energy contract for one of the bars comes to an end in March at the same time as the energy bills support scheme.

When the energy tariff came up for renewal at another of his premises last year, the bills more than doubled, even with the financial help from the government.

"We were looking at £17,000 per month," he said. "Well, that's wholly unsustainable for any business. If we had those sort of margins, I wouldn't be here now, I'd be sat on a yacht in Monaco."

He said businesses needed to know "months ago" and "for the long term" whether that energy bill support would continue.

A Treasury spokesperson said its review was aimed at reducing the public finances' exposure to volatile international energy prices from April 2023.

"We will announce the outcome of this review in the New Year to ensure businesses have sufficient certainty about future support before the current scheme ends in March 2023," they said.