Food prices have surged at their fastest pace in 18 months, driven by rising costs for chocolate, butter and eggs. The acceleration adds fresh pressure to households already struggling with the cost of living crisis.
Food inflation climbed to 4.2% in August from 4% in July, marking the highest level since February 2024. The increase reflects multiple factors including global supply costs and seasonal pressures from weather conditions.
Fresh food inflation accelerated to 4.1% for the month, up from 3.2% in July, as dairy prices continued their upward trajectory. Meanwhile, ambient food inflation slowed to 4.2% year-on-year compared with 5.1% in the previous month.
Overall shop price inflation increased to 0.9% in August despite price deflation of 0.8% for non-food products. The figures highlight how food costs are driving broader retail price pressures.
Industry response
Helen Dickinson, chief executive of the British Retail Consortium (BRC), said: "Shop price inflation hit its highest rate since March last year, fuelled by food price rises. This adds pressure to families already grappling with the cost of living."
The Bank of England acknowledged earlier this month that April's increase in national insurance contributions had contributed to accelerating food prices. Dickinson noted that £7 billion in new costs from last year's budget has created "an uphill battle for retailers" trying to limit price rises.
More than 60 retail bosses, including chiefs at Tesco, Sainsbury's and Boots, warned Chancellor Rachel Reeves last week against further tax increases in the autumn budget. The industry leaders said additional levies could contradict government plans to improve UK living standards.
The retail executives expect food and drink inflation to reach 6% later this year. Their warning letter, coordinated by the BRC, highlighted mounting pressure on the sector from rising operational costs.
Broader economic picture
Only The Guardian reports that the energy price cap is expected to rise to £1,737 annually from the current £1,720, affecting 12.1 million struggling households. This additional cost burden would compound the food price pressures facing families.
According to the BBC, food prices have increased by approximately 37% over the five years to July 2025. The long-term trend underscores the sustained impact of inflation on household budgets and shopping habits.
The Guardian and BBC report that climate change and crop disease are specifically affecting cocoa harvests, driving the notable increases in chocolate prices. These environmental factors add to the complexity of global food supply challenges.
Mike Watkins, head of retailer and business insight at NIQ, said: "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."
The BBC notes some relief for parents with cheaper clothing, books, stationery and computing available for back-to-school shopping. However, this positive development is overshadowed by the broader trend of rising food costs as families reassess household budgets.
Sources used: "PA Media", "Chronicle Live", "Manchester Evening News", "The Independent", "WalesOnline", "Liverpool Echo", "The Guardian", "BBC"
Note: This article has been edited with the help of Artificial Intelligence.
