UK shop price inflation hits two-year high as food and energy costs rise

UK shop price inflation accelerated to its highest level in two years in August, with in-store prices rising 1.5% year on year, up from 0.9% in July, according to data from research company NIQ for the British Retail Consortium.

The increase was driven by higher costs for tinned and packaged food, which rose 2.5% compared with 1.1% the previous month, while fresh produce inflation remained elevated at 3%, slightly down from 3.1% in July. Helen Dickinson, chief executive of the British Retail Consortium, said higher energy, input and commodity costs were filtering through into prices, particularly for imported and processed ambient foods. She added that non-food electrical prices also rose amid surging demand for AI-related memory chips and storage.

Dickinson noted that retailers kept clothing prices low to offer value for families preparing for the new school year but warned that rising bills would put further pressure on household budgets. Mike Watkins, head of retailer insight at NIQ, said he expected price competition between retailers to intensify in the autumn as businesses vied to attract cost-conscious shoppers.

The British Retail Consortium data follows comments from Asda’s boss, who reported rising inflation on some fresh food after a hot, dry summer that reduced crop yields. The Agriculture and Horticulture Development Board’s first harvest report of 2026 said cereals, including wheat and barley, were particularly affected, with the earliest harvest since records began in 2006.

Dickinson urged the government to address the cost of doing business, including business rates, packaging and employment taxes, to support growth while keeping living costs in check. She said companies faced “persistently high operating costs” that limited their ability to absorb price rises.

A separate report from Reuters confirmed that UK retailers raised prices by the most since 2024 in August, according to BRC data .