Rising Food Costs Propel UK Shop Price Inflation to Highest Level Since April 2024

UK shop price inflation rose to 0.7% in July 2025, up from 0.4% in June, marking the highest rate since April 2024. The increase was driven primarily by rising food prices, particularly in key staples such as tea and meat.

Food inflation reached 4.0% year-on-year in July, up from 3.7% the previous month. This marks the sixth consecutive month of rising food inflation. Fresh food prices remained steady, while ambient food items—those with longer shelf lives—saw sharper increases.

Although some non-food retailers reduced prices through promotional discounts, particularly in seasonal sectors such as clothing and furniture, the broader pressure from rising operational costs—including energy, labour, and transport—continued to feed into overall inflation.

These figures come at a time when the UK's broader consumer price inflation stands at 3.6%, indicating that food and other essential goods are outpacing general inflation. Retailers are still grappling with the effects of increased national insurance contributions introduced earlier this year, alongside proposed hikes to business rates, both of which have compounded cost pressures across the sector.

Meanwhile, consumer demand remains weak. Retail sales volumes declined again in July, continuing a ten-month downward trend. Analysts suggest that persistent cost-of-living challenges are causing consumers to cut back on discretionary spending and switch to lower-cost alternatives.

The current inflationary trend is expected to influence upcoming monetary policy decisions, with the Bank of England due to announce its next interest rate move in early August.

Although there is speculation over a possible rate cut, ongoing price pressures could delay such action.

Overall, the rise in shop prices reflects a complex mix of global commodity pressures, domestic cost increases, and shifting consumer behaviour—setting the tone for a challenging second half of the year for both retailers and households.