Shop prices rose in July at the highest rate since records began in 2005.

Shop price inflation soared by 4.4% this month, up from 3.1% in June, marking the biggest jump ever, according to the BRC-Nielsen shop price index.

This was well above both the 12- and six-month average price increases of 1.5% and 2.8% respectively.

Food inflation reached the highest rate since May 2009, up 7% in July, rising from 5.6% the previous month.

This was driven by an increase in both fresh and ambient food inflation, which were up 8% and 5.7% respectively.

Fresh food reached the highest rate since May 2009, while ambient food prices rose at the highest rate since April 2012.

Non-food inflation also grew 3%, up from 1.9% in June. This beat the previous record of 2.2% in April.

 

BRC chief executive Helen Dickinson said: “July saw the highest rate of shop price inflation since our index began in 2005, as heightened cost pressures continued to filter through to customers.

”Rising production costs – from the price of animal feed and fertiliser to availability of produce, exacerbated by the war in Ukraine – coupled with exorbitant land transport costs, led food prices to rocket to 7 per cent. Some of the biggest rises were seen in dairy products including lard, cooking fats and butter. Meanwhile, non-food prices were hit by rising shipping prices, production costs and continued disruption in China.

“As inflation reaches new heights, retailers are doing all they can to absorb as much of these rising costs as possible and to look for efficiencies in their businesses and supply chain.

“With households enduring a cost-of-living crunch, retailers are expanding their value ranges to offer the widest variety of goods to those most in need, providing discounts to vulnerable groups and raising staff pay. Nevertheless, households and businesses must prepare for a difficult period as inflationary pressures hit home.”

Nielsen head of retailer and business insight Mike Watkins added: “Consumers’ household budgets are coming under increasing strain and shelf price increases in both food and non-food have accelerated in recent weeks as more cost prices increases come through the supply chains.

“The grocery industry, in particular, is under intense pressure as retailers try to shield customers from the full impact of inflation. At the same time, there has been an increase in competitive intensity so customer retention over the summer holiday season will be key to help stem any further fall in volumes.”