Food Inflation Rises To 2.9% As Retailers Urge Budget Action

Food inflation accelerated to 2.9% in October, prompting retailers to call for action in today’s Budget to prevent mounting business costs feeding through to shoppers.

The latest British Retail Consortium (BRC) figures show annual food inflation rose from 2.5% in September, exceeding the three-month average of 2.7%. The data covers prices collected between 1 and 7 October.

Fresh food inflation remained unchanged at 2.6%, slightly below its three-month average of 2.7%. The increase in overall food inflation was driven by ambient groceries, where the annual rate climbed from 2.2% in September to 3.2% in October.

Across retail as a whole, shop price inflation increased to 2.1%, up from 1.4% the previous month. BRC chief executive Helen Dickinson said this marked the highest level in two and a half years.

She warned that retailers’ ability to absorb rising operating costs was coming under increasing strain, citing business rates, employment costs, energy bills and packaging taxes.

“The message to the Chancellor ahead of today's Budget could not be clearer: act now or prices will keep on rising,” she said.

The BRC is calling for lower employment costs, cancellation of the 3.5% business rates increase and the removal of shops from the high-value surtax.

Dickinson said retailers continued to offer Halloween promotions on sweet treats despite the increase in food inflation.

Non-food inflation also accelerated, rising from 0.8% in September to 1.7% in October, with higher energy and transport costs affecting prices.

Mike Watkins, head of retailer and business insight at NIQ, said global supply chain pressures had been building over the past six months. Food retailers’ price cuts since the end of summer had delayed some of the impact, he explained.

He added that consumers’ growing caution over higher energy and fuel costs would leave high street retailers increasingly reliant on promotions to encourage discretionary non-food spending.