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.