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UK shop price inflation in September rose to the highest rate since the spring of last year as high beef and dairy prices continued to strain household budgets, industry data has shown.
The British Retail Consortium said on Tuesday that shop prices rose at an annual rate of 1.4 per cent in September, up from 0.9 per cent last month and the highest since March 2024.
The industry body’s shop price index, which provides an early indication of pricing pressures ahead of official data on October 22, showed that food inflation remained elevated. Non-food shop prices, meanwhile, registered a smaller decline than in the previous month.
The figures underline the challenge facing chancellor Rachel Reeves as she seeks to lift living standards while fixing public finances.
At the Labour conference on Monday, she urged MPs and activists to “have faith” as she set the stage for a tax-raising Budget on November 26, aimed at balancing the books.
Helen Dickinson, chief executive of the BRC, said households were finding shopping “increasingly expensive”.
She added: “The impact on retailers and their supply chain of both global factors and higher national insurance and wage costs is playing out in prices for consumers.”
From April, retailers and other businesses have faced a rise in the national living wage and in employers’ national insurance contributions.
Last week, the OECD club of developed economies said the UK was set for the highest inflation across the G7 countries this year.
The UK’s headline official inflation figure — which unlike the BRC data includes services — was 3.8 per cent in August, higher than the 2 per cent in the Eurozone, 2.1 per cent in Germany, 1.6 per cent in Italy and 0.8 per cent in France.
The chancellor earlier this month told colleagues to prioritise the fight against inflation, amid fears that the stubbornly high rate could depress the growth the government hopes will solve its fiscal problems.
The BRC said that there were price rises for DIY and gardening supplies, while there were price cuts in some back-to-school categories as retailers offered promotions on electricals such as laptops ahead of the new academic year.
As a result, non-food prices declined 0.1 per cent against September last year, compared with a 0.8 per cent decline in August.
After rising for seven consecutive months, annual food price inflation in September stood at 4.2 per cent, unchanged from August, according to the BRC. The rate was the joint fastest pace since early 2024.
Dickinson said: “Increased labour and energy costs continue to push up input prices for many farmers, particularly of cattle, with dairy and beef prices remaining high.”
Fresh food inflation was 4.1 per cent in September, unchanged from August but well above the three-month average of 3.8 per cent.
Food inflation has been rising also in the rest of Europe as a result of increased commodity costs, often linked to climate change events, but grocery costs are rising faster in the UK than in many countries.
Dickinson said that in addition to rising wages, retailers also faced a new packaging tax, set to take effect in October, which would put further upward pressure on inflation.
Retailers continued to absorb higher costs as much as possible, Dickinson said. But she warned: “Any further tax rises in the upcoming Budget would keep shop prices higher for longer.”