- UK shop price inflation rose to 1.5 per cent in August, its highest level in two years.
- Tinned and packaged food prices rose 2.5 per cent year on year.
- Fresh produce inflation remained at 3 per cent as growers faced a difficult summer.
The cost of shopping in the UK is starting to climb again, with shop price inflation reaching 1.5 per cent in August, its highest level in two years.
The latest figures from NIQ for the British Retail Consortium (BRC) show that the increase was driven largely by food, as higher energy and input costs began to reach consumers. Tinned and packaged food recorded some of the sharpest increases, with prices rising 2.5 per cent year on year, compared with 1.1 per cent in July.
For households already dealing with high living costs, the latest figures suggest there may be less room for cheaper shopping trips in the months ahead.
Food is feeling the heat
Fresh produce remained one of the more expensive parts of the shopping basket, with inflation at 3 per cent in August. That was only slightly below the 3.1 per cent recorded in July.
A hot and dry summer has put pressure on growers, while higher fuel and energy costs have added to the cost of producing and transporting food.
Cereals such as wheat and barley have been particularly affected. The Agriculture and Horticulture Development Board said the hot weather led to the earliest harvest recorded since its records began in 2006.
The pressure is already being noticed by retailers. Asda chief executive Allan Leighton recently said inflation in some fresh food categories was beginning to rise following the difficult summer conditions.
Helen Dickinson, chief executive of the BRC, said higher energy, input and commodity costs were beginning to filter through to shop prices, particularly for ambient foods that are often imported and processed.
The pressure is not limited to supermarkets, either.
Even AI is affecting what shoppers pay
Some non-food products are becoming more expensive for a rather different reason: the global demand for AI.
Electrical goods saw price increases in August as the AI boom pushed up demand for memory chips and storage. The growing use of AI systems requires large amounts of computing infrastructure, increasing demand for components used across the technology supply chain.
Retailers have, however, kept clothing prices relatively low as they compete for families preparing for the new school year.
That competition could become more important in the autumn. Mike Watkins, head of retailer insight at NIQ, expects retailers to compete more aggressively for shoppers as households become increasingly concerned about energy bills.
But retailers themselves are facing higher costs. Dickinson said businesses were dealing with persistently high operating expenses, limiting how much of the increase they can absorb themselves.
She has called for action on the wider cost of doing business, including business rates, packaging costs and employment taxes.
The latest shop price figures come as wider UK inflation is also moving higher. Consumer price inflation rose to 2.9 per cent in July, up from 2.6 per cent in June, with higher gas and electricity prices contributing to the increase.
That leaves households facing pressure from several directions at once — higher energy bills, more expensive food and rising costs for some everyday goods — just as retailers prepare for a more competitive autumn.
