The British Retail Consortium (BRC)-KPMG Retail Sales Monitor (RSM), which is described as an accurate monthly measure of UK-wide retail sales performance showed shop price annual inflation held steady at 4.3% in the period 1-7 December, maintaining a level below the three-month average rate of 4.6%.

However, the BRC has warned cost pressures are on the horizon, which could potentially jeopardise the trend of falling inflation, which marked the lowest shop price growth since June 2022,

The British Retail Consortium (BRC) told Just Style UK clothing retailers face various cost pressures in the coming year.

The BRC stated the imminent 6.7% rise in business rates from April is expected to add hundreds of millions of pounds to retailers' bills. Additionally, challenges in the supply chain, particularly through the Red Sea, are anticipated to cause delays in the shipment of products from the Far East.

The spokesperson said: “Over the coming months, some goods will likely take longer to be shipped, as they are re-directed via longer routes and there could be a knock-on impact on availability and prices as a result of higher transportation and shipping insurance costs.”

The Red Sea crisis has already affected several businesses this week including British retailer, Next which stated the Houthi attacks in the Red Sea could cause some stock delivery delays in the early part of the year due to its issues accessing the Suez Canal.

Danish Freight company A.P Moller-Maersk announced a halt on all its transits through the Red Sea and Gulf of Aden in response to the escalating Houthi attacks on its shipping vessels earlier this week.  

Helen Dickinson, chief executive of the BRC noted non-food products had a more challenging December with price inflation rising again following retailers' investment in November Black Friday discounting and ahead of the January sales.

She also warned of potential obstacles in the coming year, including new border checks for EU imports as well as the substantial increase in business rates from April.

"The government should think twice before imposing new costs on retail businesses that would not only hold back vital investment in local communities but also push up prices for struggling households,” added Dickinson.

Mike Watkins, head of retailer and business Insight at NielsenIQ, echoed concerns about the challenges faced by retailers.

He said: “There was a lot of pressure on discretionary spend and price discounting was deeper and began earlier not just in the non-food channel but also in food retail, where promotions got back to a four-year high at the end of the year."