UK shop price inflation has climbed to its highest level in more than two years as rising energy, input and commodity costs increasingly feed through to prices.
The latest BRC-NIQ Shop Price Monitor found shop prices were 1.5% higher year-on-year in August, accelerating from 0.9% in July and coming in above the three-month average of 1.2%.
Non-food inflation also accelerated, rising from 0.2% in July to 0.9% in August, while food inflation increased from 2.2% to 2.8%.
Fresh food inflation eased marginally from 3.1% to 3%, but ambient food inflation more than doubled from 1.1% in July to 2.5% in August.
The British Retail Consortium said the impact of higher energy, input and commodity costs was beginning to filter through to shop prices, particularly for ambient foods, which are typically imported and processed.
Helen Dickinson, Chief Executive of the British Retail Consortium, said: “Shop price inflation rose to its highest level in over two years, albeit well below the headline Consumer Price Index.”
She added that electrical prices had also increased amid the AI boom, which is driving up the price of memory chips and storage, while retailers kept clothing prices low as families prepared for the new school year.
The BRC warned that retailers continue to face persistently high operating costs, reducing their ability to absorb further increases without impacting investment, jobs and prices.
Dickinson also called on the Government to address the cost of doing business, including the growing burden of business rates, packaging and employment taxes.
Mike Watkins, Head of Retailer and Business Insight at NIQ, said the increase in food and non-food inflation was not unexpected as some summer promotional activity came to an end.
However, he warned that pressures were continuing to build across retail supply chains, with price competition expected to intensify as the industry moves into the autumn months.
