The pace of price rises in UK shops accelerated in August, reaching its highest level in two years. In-store inflation climbed to 1.5% year on year, an increase from 0.9% in July, according to data from NIQ for the British Retail Consortium.
Higher energy costs contributed to the rise, particularly affecting food prices. Tinned and packaged food saw a 2.5% increase in August, up from 1.1% in the previous month. Fresh produce inflation remained high at 3%, despite a slight easing from 3.1% in July, with growers facing pressure from a hot, dry summer and substantial fuel and energy costs.
Beyond food, electrical prices also rose, attributed to the ongoing demand for AI chips, which is pushing up the cost of memory chips and storage. Helen Dickinson, chief executive of the British Retail Consortium, noted that the impact of higher energy, input, and commodity costs is filtering into prices, especially for imported and processed ambient foods.
Retailers are reportedly keeping clothing prices low to provide value for families preparing for the new school year. However, companies face persistently high operating costs, limiting their ability to absorb price increases.