Any surviving hope for a Bank of England base rate cut next month may have been killed off by a shock new report from the British Retail Consortium.

It says November was the first time in 17 months that the food inflation rate was higher than a month earlier.

While shop prices dropped 0.8% in October compared to a year earlier, the fall slowed to 0.6% in November, according to BRC figures.

Helen Dickinson, chief executive of the BRC, says: “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. Food prices increased for fresh products such as seafood, which is more vulnerable to high import and processing costs, especially during winter. 

“ … With significant price pressures on the horizon, November’s figures may signal the end of falling inflation. 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.”

Last week the mainstreamofficial measure of inflation also showed a rise – its first in three months – rising sharply to 2.3% from 1.7% recorded a month earlier. 

If the government wants to prevent higher shop prices it must reconsider the April 2025 timeline for the new packaging levy and reduce business rates “as early as possible”, Dickinson adds.