Market News

Staples like eggs, butter and chocolate led prices higher in the UK in August, as shop price inflation increased to 0.9% year-on-year, according to the British Retail Consortium.

The rate of inflation on food vastly outstripped that of other items, increasing to 4.2% year-on-year in August, against growth of 4% in July.

“The uptick in prices reflects several factors: global supply costs, seasonal food inflation driven by weather conditions, the conclusion of promotional activity linked to recent sporting events, and a rise in underlying operational costs," said Mike Watkins, head of retailer and business insight at NIQ.

"As shoppers return from their summer holidays, many may need to reassess household budgets in response to rising household bills.”

Alongside price rises for staple foods, there was some respite, with lower prices for clothing, books, stationery and computing. The prices of non-food items fell 0.8% year-on-year in August.

But overall, shop prices increased 0.9%, the BRC said, its highest rate since March last year.

“Retailers continue doing everything they can to limit price rises for households, but as the Bank of England acknowledged, the £7bn in new costs flowing through from last year’s budget has created an uphill battle for retailers," said Helen Dickinson, CEO of the BRC.

The data reflects a grim read on inflation last week, with UK price increases hitting an 18-month high at 3.8% in July, according to the ONS's consumer price index.

Transport costs, mainly as a result of higher air fares, were the largest upward driver of prices. Petrol prices nudged higher compared with last year, when prices at the pumps were falling.

Core inflation – which measures price rises without volatile food and energy costs – rose to 3.8%. Services inflation, a key measure of price pressures for the Bank of England, climbed to 5% in July from 4.7% in June.