British consumers have been hit by the fastest-growing prices in two years, new data shows, as the cost of living continues to bite in the wake of the Iran war and tech-related payment surges.
UK shop price inflation reached its highest level for two years in August, as accelerating food costs pressed on consumer budgets.
Prices for tech products also increased over the month as chip and memory shortages linked to the AI boom impacted the supply and cost of electricals.
British Retail Consortium (BRC)-NIQ figures showed that shop prices are now 1.5 per cent higher than a year ago, lifting from a rise of 0.9 per cent in July.
The latest increase represents the sharpest rise since February 2024, when it was reported at 2.5 per cent for the month.
Wider CPI inflation published by the Office for National Statistics sits at 2.9 per cent, though is expected to rise higher across the remainder of 2026, with the energy price cap having also seen another uplift last week.
The BRC data shows non-food items rose 0.9 per cent, well above the three-month average of 0.6 per cent, but it was food and fresh food prices which continued to grow much faster – food inflation up to 2.8 per cent year on year, and fresh food at 3.0 per cent.
That said, fresh food’s price increase rate is slightly down from July’s 3.1 per cent, and in line with a rolling three-month average.
It comes after a recent uptick in wider inflation as spikes in oil and gas prices linked to the conflict in the Middle East pass through into energy costs for businesses and households.
Experts linked the acceleration to higher energy costs in supply chains and the end of summer promotions and discounting.
Fresh food inflation slowed slightly to 3 per cent, while the price rises for ambient foods increased to 2.5 per cent year-on-year.
Inflation on products other than food also increased, rising to a two-year-high of 0.9 per cent for the month.
This was significantly linked to an increase in the cost of technology, such as laptops, as soaring demand for memory driven by the AI industry increased costs for tech manufacturers.
Helen Dickinson, chief executive of the BRC, said: “Shop price inflation rose to its highest level in over two years, albeit well below the headline Consumer Price Index.
“The impact of higher energy, input and commodity costs is beginning to filter through into prices, particularly for ambient foods which are typically imported and processed.
“In non-food, electrical prices rose amid the ongoing AI boom, which is forcing up the price of memory chips and storage.”
Mike Watkins, head of retailer and business insight at NIQ, said: “While the increase in both food and non-food inflation is not unexpected, particularly as some of the summer promotional activity seen in recent months comes to an end, retailers continue to keep prices low, helping consumers manage rising household costs such as energy and fuel.
“However, pressures are continuing to build across supply chains, and we can expect price competition to intensify as we move into the autumn months.”
Additional reporting by PA
