Shop prices in the United Kingdom have risen at their fastest pace in more than two years, exacerbating cost of living pressures for households. The British Retail Consortium (BRC) reported a 1.5% increase in shop prices in August, up from 0.9% in July and marking the highest rate since February 2024.
This acceleration in prices comes as consumers are already contending with a series of increases in energy bills. The BRC's shop price index, while a narrower measure than official inflation figures, indicates a growing challenge for household budgets. BRC chief executive Helen Dickinson stated that the coming months appear difficult for households, with rising bills placing additional strain on budgets.
Dickinson noted that soaring operating costs for retailers are making it harder to contain prices without impacting investment and jobs. She cited increased employer national insurance contributions, rising minimum wages, and business rates reform as contributing factors to these costs. The BRC is urging the government to address the cost of doing business, including business rates, packaging, and employment taxes, to support economic growth and manage the cost of living.
The BRC's data revealed a significant rise in non-food inflation, which climbed from 0.2% in July to 0.9% in August, the highest since February 2024. Food inflation also increased, moving from 2.2% to 2.8%, its highest point since April of this year.
Retailers are beginning to pass on the impact of higher energy and commodity costs to consumers. This is particularly evident in 'ambient' foods, such as tinned goods and cereals, which are often imported and processed. Additionally, rising prices for electrical goods are partly attributed to the increasing cost of memory chips and storage, influenced by the artificial intelligence boom. Wider inflation trends are also being affected by geopolitical events, including the conflict in the Middle East, which has disrupted oil and gas supplies and contributed to energy price hikes. The energy regulator Ofgem recently announced a 4% increase in the household energy bill cap starting in October, with further increases predicted in January.