Food inflation hits 18-month high as price of chocolate, eggs and butter rises

Food prices have risen at their fastest pace for 18 months in the latest cost of living blow for struggling households.

Food inflation reached 4.2% this month, compared to 4% in July, according to the British Retail Consortium (BRC)-NIQ Shop Price Monitor. It marks the highest level since February 2024.

Chocolate, butter and eggs are just some of the foods that have become more expensive, the latest figures show. Fresh food inflation sped to 4.1% for the month on the back of rising dairy prices, up from 3.2% in July.

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Meanwhile, ambient food inflation slowed to 4.2% year-on-year compared with 5.1% in the previous month. Overall shop price inflation increased to 0.9% in August, despite price deflation of 0.8% for non-food products.

The increase in food prices comes after the Bank of England said earlier this month that the rise in employer National Insurance contributions in April had contributed to accelerating food prices.

The rate of National Insurance paid by firms increased from 13.8% to 15%, while the earnings threshold for when employers start paying National Insurance was also lowered from £9,100 a year to £5,000.

More than 60 retail bosses, including chiefs at Tesco, Sainsbury’s and Boots, warned Chancellor Rachel Reeves last week that raising taxes further in the Autumn Budget could contradict her plans to improve UK living standards.

In the letter, co-ordinated by the BRC, the bosses said they were expecting the rate of food and drink inflation to reach 6% later this year.

Helen Dickinson, chief executive of the BRC, said: “Shop price inflation hit its highest rate since March last year, fuelled by food price rises.

“This adds pressure to families already grappling with the cost of living. Staples such as butter and eggs saw significant increases due to high demand, tightening supply, and increased labour costs.

“Chocolate also got more expensive as global prices of cocoa remain high owing to poor harvests.

”Retailers continue doing everything they can to limit price rises for households, but as the Bank of England acknowledged, the £7billion in new costs flowing through from last year’s budget has created an uphill battle for retailers.

”That is why over 60 retail CEOs recently wrote to the Chancellor with a call to ensure there are no further taxes rises on retail this autumn.”

Mike Watkins, head of retailer and business insight at NIQ, said: “The uptick in prices reflects several factors: global supply costs, seasonal food inflation driven by weather conditions, the conclusion of promotional activity linked to recent sporting events, and a rise in underlying operational costs.

“As shoppers return from their summer holidays, many may need to reassess household budgets in response to rising household bills.”