Shop prices in the UK rose at their fastest rate in more than two years in August, exacerbating cost of living pressures for households. The British Retail Consortium (BRC) reported a 1.5% increase in shop prices last month, up from 0.9% in July and marking the highest inflation rate since February 2024.
This surge in prices comes as consumers already face rising energy bills. The BRC's shop price index, a more focused measure than broader inflation figures, indicates that families are finding it increasingly difficult to manage their finances and are likely to cut back on non-essential spending. The latest figures show.
BRC chief executive Helen Dickinson stated that the coming months will be challenging for households due to increased bills. She highlighted that soaring operating costs for retailers are making it difficult to keep prices down without impacting investment and jobs. Factors contributing to these higher costs include increased employer national insurance contributions, rising minimum wages, and issues with business rates reform.
Dickinson urged the government to address the "cost of doing business," specifically mentioning the growing burdens of business rates, packaging taxes, and employment taxes, if it aims to support economic growth and control the cost of living.
The BRC's data revealed that non-food inflation significantly increased from 0.2% in July to 0.9% in August, also the highest since February 2024. Food inflation climbed from 2.2% to 2.8%, its highest point this year in April.
Retailers are beginning to pass on the impact of higher energy and commodity costs. Ambient foods, such as tinned goods and cereals, which are often imported and processed, have seen price increases. Additionally, the rising cost of memory chips and storage, influenced by the artificial intelligence boom, is contributing to higher electrical prices. Broader inflation trends are also being affected by geopolitical events impacting global supply chains and energy prices.