UK shop price inflation climbs to 2.1%, highest since 2024

Shop price inflation in the United Kingdom has surged to 2.1% year on year in October, marking the highest level in two and a half years. The British Retail Consortium reported this sharp increase from 1.4% in September, indicating that retailers are no longer able to absorb rising input costs.

The rise is driven by higher prices for energy and food ingredients following the conflict in the Middle East. Brent crude oil recently reached $117 a barrel, a substantial jump from the $70 average recorded in the months before the US and Israel attacked Iran in February. Consequently, UK gas prices have risen sharply, pushing the consumer prices index to 3.5% last month.

Food inflation, which had remained low for the past year, increased to 2.9% in October, up from 2.5% in September. Non-food inflation, covering items such as clothing and footwear, more than doubled from 0.8% to 1.7%. Helen Dickinson, chief executive of the BRC, stated that "the dam is starting to break on the huge wave of costs retailers have absorbed over the last two years." She noted that supermarkets could no longer keep the prices of tins and packets from rising, despite heavy discounting ahead of Halloween.

The timing of this price increase places pressure on Chancellor John Healey ahead of his first budget on Wednesday. Backbenchers are expected to urge him to address the high cost of living, which is harming many constituents. Bank of England officials are scheduled to raise interest rates from 3.75% to 4% next week. If retail price increases persist, it may persuade the nine-member monetary policy committee to raise rates further in December or early next year.

A report by Professor Ruth Patrick of the University of Glasgow details the impact on low-income families. Her project, Changing Realities, tracks 100 such households. In the last month, 73% of participants shopped in reduced-items aisles, 62% changed the food they bought, and 63% left the heating off despite the cold. Patrick observed that petrol prices above £1.75 a litre and diesel often above £2 a litre can mean that work does not pay for those who rely on cars for school runs and commutes.

One respondent, identified as Rosie L from rural Scotland, said the cost of running a car is becoming unmanageable. She added that public transport is not accessible or reliable in her area, and that not having a car would affect every aspect of life, particularly because her children are disabled. The report includes in-depth interviews with 70 participants, of which 67 shared strategies to reduce costs over the previous month.

Patrick argued that current government and local authority help does not match the scale of the problem. She cited Andy Burnham’s pledge to run a "cost of living government" and suggested that restoring the real value of child benefit would be a vital step to support families facing additional costs.