Shop prices climbed at their fastest rate for nearly three years last month and the increase looks set to accelerate, according to a monthly report published by the retail industry.

Figures from the British Retail Consortium (BRC) showed prices in December were 0.8% up compared with a year earlier, the highest rate since March 2019.

The rise was led by food prices and blamed on factors including labour shortages across supply chains.

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It adds to pressure facing consumers at a time when the official inflation rate – which includes energy bills and fuel prices as well as store goods – is at a 10-year high and set to climb further.

They also face higher monthly mortgage payments as interest rates rise and a coming hike in national insurance.

BRC chief executive Helen Dickinson said: “Consumers may have noticed that their Christmas shop became a little more expensive in December.

“Not only did prices rise, but did so at a faster rate, especially in food.”

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Retailers have largely been keeping a lid on shop prices over the last two and a half years.

The shop price index had been showing year on year declines since May 2019 before posting an increase of 0.3% in November and accelerating last month.

It was led by a jump in food price inflation, up from 1.1% in November to 2.4% in December.

Non-food prices, by contrast, recorded a year-on-year fall of 0.2%, compared with a decline of 0.1% the month before.

The increases come at a time when the industry faces shortages of HGV drivers and meat processing workers – blamed on factors linked to Brexit as well as the pandemic – while global supply chain pressures are also taking their toll.

Ms Dickinson said: “Food prices were falling earlier on in 2021, but the acute labour shortages across supply chains, amongst other factors, led to the year ending with a notable increase; for example, fresh food saw the largest rate of inflation in almost a decade.

“The trajectory for consumer prices is very clear: they will continue to rise, and at a faster rate.

“Retailers can no longer absorb all the cost pressures arising from more expensive transportation, labour shortages, and rising commodity and global food prices.”

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