Food prices have surged at their quickest rate in 18 months, delivering another blow to households already facing financial challenges. According to the British Retail Consortium (BRC)-NIQ Shop Price Monitor, food inflation rose to 4.2% this month, up from 4% in July, marking the highest level since February 2024.
The cost of chocolate, butter, and eggs has notably increased, with fresh food inflation spiking to 4.1% due to rising dairy prices. In contrast, ambient food inflation slowed to 4.2% year-on-year compared to 5.1% in the previous month. Overall shop price inflation climbed to 0.9% in August, despite non-food products experiencing a price deflation of 0.8%.
The rise in food prices has been linked to the Bank of England’s statement earlier this month, attributing the acceleration to the increased National Insurance contributions by employers in April. Retail CEOs, including those from major stores like Tesco, Sainsbury’s, and Boots, cautioned Chancellor Rachel Reeves against further tax hikes in the upcoming Budget, expressing concerns about the impact on UK living standards.
In a coordinated letter by the BRC, retail bosses predicted food and drink inflation to hit 6% later in the year. Helen Dickinson, BRC’s chief executive, highlighted the strain on families due to rising shop price inflation, especially on essential items like butter and eggs driven by high demand and increased labor costs. Retailers are striving to mitigate price hikes, but the additional costs from last year’s budget have posed challenges.
Mike Watkins, NIQ’s head of retailer and business insight, mentioned various factors contributing to the price increase, including global supply costs, seasonal food inflation, the end of promotional activities related to recent events, and rising operational expenses. As households return from summer vacations, many may need to adjust their budgets to cope with escalating bills.
