Source: Sharecast
The British Retail Consortium's shop price index was 0.9% higher than last August, its highest annual increase since March 2024, as a 0.8% fall in non-food prices was outweighed by a 4.2% increase in food inflation.
Shop prices had stayed in deflationary territory between July 2024 and May 2025 before resuming their upwards momentum over recent months, as retailers contended with rising labour and wholesale costs.
The year-on-year change in the shop price index picked up from -0.1% in May to 0.4% in June, and then to 0.7% in July.
The recent acceleration in price growth "adds pressure to families already grappling with the cost of living", according to Helen Dickinson, chief executive of the BRC.
"Staples such as butter and eggs saw significant increases due to high demand, tightening supply, and increased labour costs. Chocolate also got more expensive as global prices of cocoa remain high owing to poor harvests."
On the upside, the costs of clothing, books, stationery, and computing were all lower ahead of the start of the new academic year, giving "some respite for parents", Dickinson said.
The industry has been hit with £7bn in additional costs since April – comprising £5bn from increases to National Insurance contributions and the National Living Wage, as well as £2bn in extra costs from the new packaging tax – creating an "uphill battle for retailers", the BRC boss said.
"That is why over 60 retail CEOs recently wrote to the Chancellor with a call to ensure there are no further taxes rises on retail this Autumn. The planned business rates reforms present an opportunity to deliver a meaningful reduction in retail, hospitality and leisure bills, ensure no shop pays more as a result and help retailers keep prices low for customers.”
