Shop price inflation climbed to its highest level in more than two years in August, as rising costs continued to filter through to retailers and shoppers.

Prices rose 1.5 per cent year on year during the month, up from 0.9 per cent in July and above the three-month average of 1.2 per cent, according to the latest shop price figures.

Non-food inflation also accelerated, increasing to 0.9 per cent year on year in August from 0.2 per cent the previous month. The figure was above the three-month average of 0.6 per cent.

Food inflation rose to 2.8 per cent year on year, compared with 2.2 per cent in July and ahead of the three-month average of 2.5 per cent. Fresh food inflation edged down slightly to 3.0 per cent, from 3.1 per cent in July, matching its three-month average.

Ambient food inflation recorded the sharpest increase, rising to 2.5 per cent year on year in August from 1.1 per cent in July. This was also above the three-month average of 1.8 per cent.

British Retail Consortium chief executive Helen Dickinson said: “Shop price inflation rose to its highest level in over two years, albeit well below the headline Consumer Price Index. The impact of higher energy, input and commodity costs is beginning to filter through into prices, particularly for ambient foods which are typically imported and processed.

“In non-food, electrical prices rose amid the ongoing AI boom, which is forcing up the price of memory chips and storage. Meanwhile, retailers kept clothing prices low to offer value for families getting ready for the new school year.”

Dickinson warned that the outlook for households remained difficult as retailers faced mounting cost pressures.

“The months ahead look challenging for households, with rising bills putting further pressure on budgets. Retailers are facing persistently high operating costs, limiting their ability to absorb further increases without impacting investment, jobs and prices,” she said.

“If the Government is serious about supporting growth while keeping the cost of living in check, it must address the cost of doing business, including by tackling the growing burden of business rates, packaging and employment taxes.”

NIQ head of retailer and business insight Mike Watkins added: “While the increase in both food and non-food inflation is not unexpected, particularly as some of the summer promotional activity seen in recent months comes to an end, retailers continue to keep prices low, helping consumers manage rising household costs such as energy and fuel. However, pressures are continuing to build across supply chains, and we can expect price competition to intensify as we move into the autumn months.”

Photo by Simon Kadula on Unsplash

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