Price rises gather pace in UK shops amid higher energy costs
Price rises in UK shops accelerated to their fastest pace in two years in August, according to a British Retail Consortium survey, as higher energy costs and strong AI-driven demand for chips pushed up the cost of food and electronics. This adds pressure on households already grappling with rising bills and comes as a fresh test for Andy Burnham's government, which has pledged to ease cost-of-living strains.
In-store inflation rose to 1.5% year on year in August, up from 0.9% in July, with tinned and packaged food prices climbing 2.5%. Fresh produce inflation stayed elevated at 3%, though slightly down from July's 3.1%, as growers faced a hot, dry summer and high fuel and energy costs. BRC chief executive Helen Dickinson said electrical prices had also risen amid the AI boom's impact on memory chip and storage costs, while urging the government to tackle business rates, packaging and employment taxes. Wider UK consumer price inflation stood at 2.9% in July, and households face the steepest summer rise in energy bills in four years.
- Shop price inflation hit 1.5% in August, a two-year high
- Food, energy and AI chip costs drove the increase
- BRC urges government action on business rates and taxes
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The British Retail Consortium is a trade body for retailers, and its survey tracks prices in shops. Shop prices can change for reasons such as the cost of making, storing and transporting goods, as well as the price retailers pay suppliers.
Energy is used throughout food production and delivery, while growers can be affected by weather and fuel costs. Electronics also rely on memory and storage chips, which are used in computers and other devices; rising demand linked to artificial intelligence can add to their cost.
Shop-price inflation is one part of the wider cost of living, alongside household bills and other expenses. The government, led by Andy Burnham, has said it wants to ease cost-of-living pressures, while retailers have called for changes to business costs such as rates, packaging and employment taxes.
Both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Rising shop prices reflect real cost pressures, including energy and fuel bills, difficult growing conditions and higher chip costs driven by demand. Retailers may have limited room to absorb these increases, so addressing business costs could help them keep prices down and sustain investment and jobs.
The case against
Households are already facing higher bills, and faster food-price rises make it harder for people, especially those on tight budgets, to afford essentials. The report does not establish how much of the increase retailers could absorb, so calls to ease business costs should be weighed against the possibility that relief may not reach shoppers or may shift costs elsewhere.