Inflation in the UK remained at 3.8% last month, despite the cost of food accelerating for a fifth straight month.
The official data from the Office for National Statistics (ONS) shows that air fares made the largest downward contribution to the August Consumer Prices Index (CPI) figure, while food, restaurants, hotels, and motor fuels made upward contributions.
Food and non-alcoholic drinks inflation increased from 4.9% to 5.1%, the highest recorded rate since January 2024, as supermarkets and manufacturers passed on higher costs resulting from the hike in employer National Insurance Contributions, the new packaging tax, business rates rises, and the cost of border checks.
The ONS reports on 49 main product categories, which have seen a mixed performance. Five categories saw inflation in double digits: beef and veal (24.9%), butter (18.9%), chocolate (15.4%), coffee (15.4%), and whole milk (12.6%). Meanwhile, prices fell the fastest for olive oil (-12.5%), flours (-5.9%), sugar (-3.8%), and pasta (-2.8%).
“It’s concerning seeing food and drink inflation rise further, when commodity and energy prices are fairly stable,” said Karen Betts, Chief Executive of the Food and Drink Federation (FDF), blaming regulatory and tax costs.
“We need government to bring down the cost of regulation – so it’s better designed, easier to implement, and better sequenced so it doesn’t all land at once on companies struggling to cope. Manufacturers are looking to the Chancellor in the Budget to ensure we have proper policies and incentives in place to drive productivity growth across food and drink, to offset regulatory and tax costs, and to boost the employment and prosperity that food and drink manufacturing provides in communities up and down the country. She must resist bringing in new costs to ensure the UK is an attractive place to invest.”
Earlier this week, an FDF report forecast that food and non-alcoholic drink inflation could reach 5.7% by December.
