Shop price inflation reaches highest rate since 2005

The prices of everyday goods in UK shops are continuing to rise, according to the latest data from the British Retail Consortium (BRC).

Shop price annual inflation accelerated to 4.4% in July — the highest rate since the index first started in 2005, and up from 3.1% in June.

Food inflation rose to 7%, from 5.6% in June, driven by an 8% rise in fresh food inflation, compared with 6.2% last month.

Meanwhile, inflation for non-food goods climbed to a record high of 3%, from 1.9% in June. The previous record for non-food inflation was 2.2%, seen in April.

“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%,” said Helen Dickinson, chief executive of the BRC.

“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.”

Retailers are absorbing these rising costs where possible, as well as looking for efficiencies in their businesses and supply chain, Dickinson said. To help households through the cost-of-living crisis, retailers are also 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,” Dickinson added.