UK Shop Price Inflation Hits Two-Year High as Energy Costs Feed Through
Key Takeaways
- •Shop price inflation in the UK rose to 1.5% in the year to August, up from 0.9% in July.
- •Food price inflation increased to 2.8% from 2.2% in the previous month.
- •The British Retail Consortium said higher energy and commodity costs are beginning to feed into retail prices.
- •Helen Dickinson warned that retailers face high operating costs that could affect investment, jobs and prices.
- •The Bank of England has said inflation could move above 4% if the Strait of Hormuz remains closed to shipping.
Shop price inflation in the UK has reached a two-year high and is expected to keep rising through the autumn as higher energy and commodity costs filter through to consumers, according to a leading business group.
The British Retail Consortium (BRC), which represents major supermarkets and high street shops across the UK, said shop price inflation rose to 1.5 per cent in the year to August. That compares with 0.9 per cent in the year to July and a three-month average of 1.2 per cent.
The latest figure marks the highest level in more than two years, adding pressure to household budgets as shoppers make their final summer purchases and head into a period when retailers are typically weighing demand against higher input costs.
Food price inflation increased to 2.8 per cent from 2.2 per cent in the previous month’s reading. Food prices had generally been trending lower for most of 2026, but the latest increase may reflect broader UK economic trends pointing to further price rises before the end of the year.
Helen Dickinson, chief executive of the BRC, said the effect of higher energy prices and commodity costs was “beginning to filter through into prices”.
“ The months ahead look challenging for households, with rising bills putting further pressure on budgets,” Dickinson said.
“ Retailers are facing persistently high operating costs, limiting their ability to absorb further increases without impacting investment, jobs and prices.”
She added that costs could be eased if the government tackled the cost of doing business by reducing red tape and addressing the “growing burden of business rates”.
UK set for higher inflation
Economists believe inflation could peak around the turn of the year, provided hostilities in the Middle East ease and the Strait of Hormuz reopens for shipments carrying critical oil and gas supplies.
On Sunday, the US and Iran exchanged strikes for the first time in weeks, raising concern that trading flows may remain blocked for longer.
If the Strait remains closed to ships, the Bank of England has predicted that inflation could rise above four per cent. In that scenario, the central bank could also raise interest rates, increasing borrowing costs for households.
By CityAM
