Rising food inflation fuels fresh cost concerns

Food and drink inflation rose to 4.4% in May, piling further pressure on grocery retailers as new business costs and higher energy bills filter through the supply chain.

The latest Consumer Price Index (CPI) data from the Office for National Statistics shows that while overall inflation held steady at 3.4%, the cost of food and non-alcoholic beverages jumped by a full percentage point compared to April, marking the highest level since February 2024.

“Headline inflation held at 3.4% as higher bills and new business costs introduced in April continued to filter through into the economy,” said British Retail Consortium (BRC) director of insight Kris Hamer.

“Worryingly for consumers, the price of the weekly shop rose once again as food inflation continued its upward trajectory.”

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However, there were pockets of relief for shoppers. Prices for breakfast staples including eggs, bread and cereals dipped month-on-month, while deflation in clothing and footwear also persisted.

Retailers have long warned that costs stemming from the Chancellor’s Autumn Statement, including business rates changes and wage hikes, would eventually translate into higher shelf prices. The BRC has now renewed its call for reform.

“Food inflation is now above 4% and looks set to increase further later in the year,” Hamer added.

“The government must now take action to relieve cost pressures retailers are facing. Ensuring no shop pays more under business rates reform would be a meaningful step forward, offering much needed relief to an industry that continues to see prices, job losses and store closures all rising.”

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