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Food Drives Shop Price Inflation To 18-Month High

A “significant” jump in the cost of grocery staples has contributed to shop price inflation hitting its highest rate since March last year.

The data from the British Retail Consortium (BRC) and NIQ shows that overall prices rose 0.9% year-on-year in August, above the three-month average of 0.6%.

Food inflation hit 4.2% this month, up from 4% in July and the highest reading since February 2024. Fresh food inflation accelerated from 3.2% to 4.1%, while ambient food inflation decreased from 5.1% to 4.2%.

BRC Chief Executive Helen Dickinson noted that the rapid rise in food costs was adding to the pressure on people already struggling with the cost of living. “Staples such as butter and eggs saw significant increases due to high demand, tightening supply, and increased labour costs,” she said.

Meanwhile, non-food prices were down 0.8% this month, following a decline of 1.0% in July, with lower prices for clothing, books, stationery, and computing providing some respite for parents ahead of the new academic year.

While retailers were “doing everything they can to limit price rises for households”, Dickinson highlighted that the industry faces £7bn in new costs from hikes in employer national insurance contributions and the minimum wage.

Last week, more than 60 retail bosses, including those from Tesco, Sainsbury’s, Asda, John Lewis, Boots, and Superdrug, warned Chancellor Rachel Reeves that increasing taxes further in the next autumn budget could contradict the Labour Party’s manifesto pledge to improve living standards in the UK.

In a letter coordinated by the BRC, the retailers highlighted that food inflation was on track to hit 6% later this year, and prices will rise even further if they face further cost pressures.

Dickinson said today: “The planned business rates reforms present an opportunity to deliver a meaningful reduction in retail, hospitality and leisure bills, ensure no shop pays more as a result and help retailers keep prices low for customers.”

Meanwhile, Mike Watkins, the head of retailer and business insight at NIQ, noted that the uptick in prices also reflected other factors, including global supply costs, seasonal food inflation driven by the weather, and the end of promotional deals linked to sporting events.

“As shoppers return from their summer holidays, many may need to reassess household budgets in response to rising household bills,” he added.