Key facts
- UK shop price inflation reached 1.5% in August, a two-year high.
- Food price inflation rose to 2.8% in August.
- The British Retail Consortium attributes the inflation to rising energy and commodity costs.
- Retailers face high operating costs, limiting their ability to absorb further increases.
- Inflation could peak around year-end if Middle East energy supplies stabilize.
Shop price inflation in the UK has reached a two-year high, increasing to 1.5% in the year to August, up from 0.9% in July. The British Retail Consortium (BRC), which represents major supermarkets and high street shops, warned that this trend is set to continue through the autumn as higher energy and commodity costs filter through to consumers.
The latest figures show a significant jump, with food price inflation rising to 2.8% from 2.2% in the previous month. This marks a reversal of a downward trend in food prices seen for most of 2026.
Helen Dickinson, chief executive of the BRC, stated that the impact of higher energy and commodity costs is "beginning to filter through into prices." She cautioned that "months ahead look challenging for households, with rising bills putting further pressure on budgets." Dickinson also noted that retailers face persistently high operating costs, which limits their ability to absorb further increases without affecting investment, jobs, and prices.
Economists suggest that inflation could peak around the end of the year, provided that geopolitical tensions in the Middle East subside and shipping routes like the Strait of Hormuz re-open. The US and Iran recently traded strikes, raising concerns about prolonged disruption to oil and gas shipments. The Bank of England has indicated that if the Strait of Hormuz remains closed, inflation could exceed 4%, potentially leading to interest rate hikes.