UK food inflation hits one-year high, industry data shows

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UK food inflation rose for the fourth consecutive month to a one-year high in May, driven by fresh food prices, according to industry data that suggests an ongoing squeeze on household finances.

Food prices rose at an annual rate of 2.8 per cent in this month, up from 2.6 per cent in April and the fastest pace since May last year, the British Retail Consortium said on Tuesday.

Helen Dickinson, chief executive of the BRC, said: “Fresh foods were the main driver, and red meat eaters may have noticed their steak got a little more expensive as wholesale beef prices increased.”

Dickinson said retailers were now absorbing an additional £5bn in costs from increases to employer national insurance contributions and the minimum wage, which took effect in April.

Global food prices were up by an annual rate of 7.6 per cent in April, according to the UN Food and Agriculture Organization index, with vegetable oil and dairy products rising by more than 20 per cent year on year.

However, the BRC said prices of non-food items remained in deflation at minus 1.5 per cent, keeping overall grocery price inflation at minus 0.1 per cent in May.

The BRC data also showed a divergence between rising annual inflation for fresh food and an easing trend for ambient food, such as canned goods.

The trade body’s figures come ahead of official inflation data for May on June 18. BRC and inflation data so far this year have shown a pick-up in food price growth compared with most of 2024, reflecting higher wholesale food prices and higher costs for businesses.

In April, the ONS reported sharp month-on-month price increases for meat, oil and confectionery as overall inflation jumped more than expected to 3.5 per cent.

Inflation is expected to remain elevated for most of the year, driven by energy and food, though overall wage growth continues to outstrip the rate of price increases.

“We recognise that it will be incredibly painful for people, particularly where this is about energy, food,” Clare Lombardelli, Bank of England deputy governor, said earlier this month as the central bank cut interest rates by a quarter point to 4.25 per cent.

Mike Watkins, head of retailer and business insight at NielsenIQ, which compiles the data with BRC, said increasing food prices were “an extra challenge to consumer spending alongside rising household bills”.

“If consumer confidence remains weak, as looks likely, then retailers may have to work harder to encourage shoppers to spend over the summer,” he added.