UK shop price inflation hits highest level since 2024 as retailers pass on costs
The British Retail Consortium says UK shop price inflation rose to 2.1% in October, the highest in two and a half years. Retailers are starting to pass on higher energy and food ingredient costs to customers.
Shop price inflation in the United Kingdom climbed to 2.1% year on year in October, its highest level in two and a half years, according to the British Retail Consortium (BRC), the lobby group for British retailers. The figure was 1.4% in September. The BRC says retailers are beginning to pass on rising energy and food ingredient costs linked to the Middle East conflict. The data came a day before Chancellor John Healey presents his first budget on Wednesday.
Food and non-food prices
Food inflation, which had stayed low over the past year, rose to 2.9% in October from 2.5% in September. Non-food inflation, covering items such as clothing and footwear, more than doubled from 0.8% to 1.7%.
Brent crude oil recently reached $117 a barrel, compared with an average of $70 in the months before the US and Israel attacked Iran in February. Gas prices have also risen sharply, and UK consumer price inflation reached 3.5% last month. Until now, retailers had largely absorbed higher raw material costs, mainly because of weak consumer demand.
Helen Dickinson, the BRC's chief executive, said: “The dam is starting to break” on the costs retailers have absorbed over two years. She said there was heavy discounting ahead of Halloween, but supermarkets could no longer hold down prices of tins and packets.
Pressure on the government and central bank
Bank of England officials are expected to raise interest rates next week from 3.75% to 4%. If retail price rises persist, many of the nine members of the monetary policy committee may back further increases in December or early next year.
Healey faces pressure from Labour backbenchers to tackle the cost of living. A report by Ruth Patrick, professor at the University of Glasgow, finds high fuel prices are hurting low-income families. In the past month, 73% of participants in her Changing Realities project shopped in reduced-item aisles, and 63% left the heating off even when cold.
