Rising grocery costs are piling further pressure on UK households, with eggs, butter and chocolate leading a fresh surge in food inflation.
According to the British Retail Consortium (BRC), food prices rose by 4.2% in August, up from 4% in July and the sharpest increase in 18 months.
Overall shop price inflation also edged up to 0.9%, despite non-food prices falling by 0.8%.
BRC chief executive Helen Dickinson said the cost of everyday staples had jumped because of strong demand, tighter supply chains and higher labour costs. Cocoa shortages have also kept chocolate prices elevated.
The BRC warned that retailers face an additional £7bn in costs following last year’s budget changes to national insurance and the minimum wage, while more than 60 major retailers, including Tesco and Sainsbury’s, have urged the chancellor not to raise taxes further this autumn.
Industry leaders fear food inflation could hit 6% later this year.
Mike Watkins of NIQ said seasonal weather patterns, higher global supply costs and the end of promotions linked to summer events also played a role in the latest rise.
“As households return from summer holidays, many may have to reassess their budgets,” he added.
The impact is already showing in official figures: consumer price inflation rose to 3.8% in July, above forecasts, and well above the Bank of England’s 2% target for the tenth month running.
Food and drink prices alone were up 4.9% year on year, with beef, coffee, orange juice and chocolate among the steepest climbers.
Droughts in southern Europe have pushed up the cost of fruit and vegetables at a time when prices usually fall.
The squeeze on household budgets is set to worsen with energy bills also expected to rise.
Ofgem is forecast to increase its October price cap by 1% to £1,737 a year for a typical dual-fuel household.
Campaigners warn the change could leave millions struggling. The End Fuel Poverty Coalition said average bills remain 67% higher than before the energy crisis, with an estimated 12.1 million households already unable to afford their energy costs.
“We are now entering the fifth winter of the energy crisis, and the time for tinkering with the price cap is over,” said Simon Francis of the coalition.
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