UK shop prices continue rise to record high as inflation bites

A person looks at food goods as UK shop prices rise
UK shop prices rose to their highest level ever this month as retailers passed on inflationary pressures to consumers. Photo: Reuters/Kevin Coombs

UK shop prices rose to their highest level ever at 4.4% in July, up from 3.1% the month before, as inflation continues to bite.

According to the British Retail Consortium (BRC) on Wednesday, this was the highest rate of shop price inflation since the index first began in 2005, as heightened cost pressures continued to filter through to customers.

It was also above both the 12 and 6-month average price increase of 1.5% and 2.8%, respectively.

Food inflation accelerated strongly to 7% during the month, up from 5.6% in June, the highest inflation rate since May 2009, and above the 12- and 6-month average price growth rates of 2.8% and 4.4%, respectively.

Meanwhile, non-food inflation climbed to 3% from 1.9%. This sat above the 12- and 6-month average price increases of 0.8% and 2.0%, and was a record-high, beating the previous record of 2.2% in April 2022.

Read more: Energy bills: MPs warn £400 discount not enough to mitigate October rise

The data also showed that fresh food inflation strongly accelerated in July to 8.0%, up from 6.2% in June. This is well above the 12- and 6-month average price growth rates of 2.9% and 4.8%, respectively. This is the highest inflation rate since May 2009.

“Rising production costs – from the price of animal feed and fertiliser to availability of produce, exacerbated by the war in Ukraine – coupled with exorbitant land transport costs, led food prices to rocket to 7%.” Helen Dickinson, chief executive of the British Retail Consortium, said.

“Some of the biggest rises were seen in dairy products, including lard, cooking fats and butter. Meanwhile, non-food prices were hit by rising shipping prices, production costs and continued disruption in China.”

She added: “As inflation reaches new heights, retailers are doing all they can to absorb as much of these rising costs as possible and to look for efficiencies in their businesses and supply chain.

“With households enduring a cost-of-living crunch, retailers are expanding their value ranges to offer the widest variety of goods to those most in need, providing discounts to vulnerable groups, and raising staff pay. Nevertheless, households and businesses must prepare for a difficult period as inflationary pressures hit home.”

Watch: How to save money on a low income

It comes as UK inflation hit a 40-year high of 9.4% in the 12 months to June, the Office for National Statistics (ONS) said last week.

This was partly due to a 42% year-on-year increase in petrol prices, and an increase of almost 10% in food prices.

Food and non-alcoholic drinks rose by 9.8% in the year to June, the highest rate since March 2009. Milk, cheese and eggs as well as vegetables, meat and other food products such as ready meals became more expensive.

Average petrol prices stood at 184p a litre last month, up 18.1p since May alone, while diesel raced 12.7p higher to 192.4p a litre, which was also a record.

Read more: Cost of living: Top tips to save money on a UK staycation

It comes on top of huge gas and electricity tariff increases, with the annual inflation rate standing at a record 70.2% and with further rises to come.

Mike Watkins, head of retailer and business insight, at NielsenIQ, said: “Consumers’ household budgets are coming under increasing strain and shelf price increases in both food and non-food have accelerated in recent weeks as more cost prices increases come through the supply chains.

“The grocery industry in particular is under intense pressure as retailers try to shield customers from the full impact of inflation. At the same time there has been an increase in competitive intensity so customer retention over the summer holiday season will be key to help stem any further fall in volumes.“

Watch: How does inflation affect interest rates?