UK Food Inflation Hits 19-Month High as Families Face Rising Costs
Food prices in the UK surged again in August, marking the fifth consecutive month of increases, according to official figures. The cost of food and non-alcoholic drinks rose 5.1% year-on-year, the fastest pace since early 2023, driven largely by soaring prices for beef, butter, milk, and chocolate.
Despite food inflation climbing, overall UK inflation remained steady at 3.8%, unchanged from July, as slower growth in areas like airfares helped offset the spike in grocery bills.
Why Are Food Prices Rising?
Economists say the latest surge in food costs is linked to businesses passing on higher expenses to shoppers. Recent government increases to the minimum wage and National Insurance Contributions (NICs) have pushed up operating costs for supermarkets and food producers, which are now being reflected in retail prices.
The Office for National Statistics (ONS) confirmed the 5.1% increase was the highest in 19 months, leaving the UK with significantly higher inflation than other major European economies. In August, inflation stood at just 0.8% in France and 2.1% in Germany.
What’s Driving the Biggest Price Hikes?
Some everyday staples have seen particularly sharp increases:
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Beef and veal: up 24.9%
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Butter: up 18.9%
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Chocolate: up 15.4%
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Coffee: up 15.4%
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Whole milk: up 12.6%
The British Retail Consortium (BRC) warned that food inflation is now outpacing wage growth, which reached 4.7% between May and July. “With food inflation rising faster than wages, many families are struggling to cope,” said Kris Hamer, BRC’s director of insight.
Economic and Political Reactions
Chancellor Rachel Reeves acknowledged the pressure on households, promising action in her upcoming November Budget to bring down costs. However, her decision last year to raise the minimum wage and NICs continues to draw criticism from businesses, who argue these measures are fueling higher prices.
Shadow Chancellor Sir Mel Stride said the rise in food costs was “deeply worrying for families” and accused Labour’s policies of stoking inflation.
Impact on Businesses and Shoppers
The rising costs are also hitting small businesses. Tom Egan, co-founder of Coosh Bakery in Nottingham, said the price of cocoa has more than doubled due to poor weather in major growing countries like Ghana.
“Last year, we paid around £60 for 10kg of cocoa. Now it’s over £150,” he explained. Butter costs have also climbed sharply, with supply shortages driving up prices. Combined with higher NICs, Egan said his bakery has been forced to delay investments in new equipment and technology.
What Happens Next?
The Bank of England has cut interest rates five times since last August, bringing borrowing costs down to 4%. Despite expectations that inflation could peak at 4% in September, the central bank is widely predicted to hold rates steady in its next meeting.
Economists remain divided on the outlook. Some expect food inflation to edge higher before easing, while others predict falling wage growth will eventually help cool prices. Capital Economics forecasts UK inflation will drop closer to US and eurozone levels by the end of next year, allowing the Bank of England to cut rates to 3%.