Shop prices jumped the most since 2005 in July as the cost of fresh food was boosted by rising fees for fertiliser, animal feed and transport.
Prices rose 4.4% compared to July last year, a step up from an annual increase of 3.1% in June, according to the latest British Retail Consortium shop price index compiled by market research firm Nielsen IQ.
Fresh food inflation jumped to 8% on the index from 6.2% a month earlier, the highest rate since March 2009. This contributed to overall food inflation of 7%.
Helen Dickinson, chief executive of the British Retail Consortium (BRC), a trade body which represents most major retailers, said some of the biggest price rises were seen in dairy products, including lard, cooking fats and butter.
She said: “Households and businesses should prepare for a difficult period as inflationary pressures hit home.”
“Rising production costs — from the cost of animal feed and fertilizer to the availability of produce, exacerbated by the war in Ukraine — combined with exorbitant ground transportation costs have sent food prices soaring.”
The high rate of inflation for staple foods is likely to hit low-income households harder, increasing pressure on those already hit by cuts to universal credit benefits and rising energy and petrol costs.
A fifth of UK households now have an average shortfall of £60 a week between what they earn and what they need to cover essentials such as energy bills, rent, transport and food as rising costs for life leave people with the lowest amount of spare cash for almost five years, according to data from the Asda Income Tracker compiled by the Center for Business and Economic Research (Cber) published this week.
Shoppers are turning to discount stores, abandoning brands in favor of supermarket own-label goods and cutting back on luxuries such as subscription services and gambling as they try to trim their budgets.
Food is not the only cause of shop price inflation.
Non-food prices rose 3% from July last year, according to BRC data, driven by higher supply and production costs, partly caused by continued disruption in China from Covid-related restrictions.
Dickinson said: “As inflation reaches new heights, retailers are doing everything they can to absorb as much of these rising costs as possible and seek efficiencies in their business and supply chain. With households experiencing a cost of living crisis, retailers are expanding their value ranges to offer the widest variety of goods to those most in need, providing discounts to vulnerable groups and increasing staff wages.
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