A “significant” jump in the cost of grocery staples such as eggs and butter is stoking food inflation, according to data pointing to a renewed cost of living squeeze.
The British Retail Consortium (BRC) said prices had risen at their fastest pace for 18 months, with food inflation hitting 4.2% this month. This was up from 4% in July and the highest reading since February 2024, according to its monthly shop price monitor.
The BRC chief executive, Helen Dickinson, said the rapid rise added to the pressure on people already struggling with the cost of living.
“Staples such as butter and eggs saw significant increases due to high demand, tightening supply, and increased labour costs,” she said.
“Chocolate also got more expensive as global prices of cocoa remain high owing to poor harvests.”
The BRC also said that its data showed that overall shop price inflation increased to 0.9% in August, even as non-food products fell by 0.8%.
While shops were “doing everything they can to limit price rises for households”, Dickinson said, the industry faces £7bn in new costs after last year’s autumn budget, when Rachel Reeves introduced changes to employer national insurance contributions and the minimum wage.
Last week more than 60 retail bosses, including Tesco, Sainsbury’s and Boots, warned Reeves that increasing taxes further in the next autumn budget could contradict her plans to improve UK living standards.
In a letter coordinated by the BRC, the bosses said they were expecting food inflation to hit 6% later this year.
Mike Watkins, the head of retailer and business insight at NIQ, said that the uptick in prices also reflected other factors, including global supply costs, seasonal food inflation driven by the weather and the end of promotional deals linked to sporting events.
“As shoppers return from their summer holidays, many may need to reassess household budgets in response to rising household bills,” Watkins added.
Last week official figures showed that inflation rose again in July to a higher-than-expected 3.8%, partly driven by higher food prices and travel costs.
The annual rate of inflation, as measured by the consumer prices index, climbed from 3.6% in June to sit above the Bank of England’s 2% target for the 10th consecutive month.
Food and non-alcoholic beverages were up 4.9% year on year in July, the Office for National Statistics found, an increase from 4.5% in the 12 months to June. Beef, orange juice, coffee and chocolate were among the biggest risers.
Droughts in Spain, Italy and Portugal, where the UK sources much of its fresh fruit and vegetables, have pushed up prices this summer, at a time when prices typically fall.
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Higher grocery prices come as households also brace for steeper energy bills, with the industry regulator for Great Britain due to announce a new price cap on Wednesday.
Ofgem’s quarterly price cap is expected to rise by 1% in October, according to forecasts from Cornwall Insight, a leading energy consultancy.
It has predicted Ofgem will increase the cap to £1,737 a year for a dual-fuel household, from the current level of £1,720. The rise would come into effect in October and remain in place until the end of the year.
Charities have warned such a rise could mean millions of households will struggle to pay their energy bills.
Simon Francis of the End Fuel Poverty Coalition said the average household was paying 67% more for their energy compared with the winter of 2020-21.
The charity estimates that 12.1 million UK households are struggling with the cost of their energy bills and says they cannot shoulder any more price increases.
“We are now approaching the fifth winter of the energy bills crisis and the time for tinkering with the price cap is over,” he said.