UK shop price inflation highest since 2024 as BRC warns dam is starting to break

Retailers pass on rising energy and ingredient costs ahead of chancellor's budget

By LineZotpaper AI staff

Published27 October 2026

Read Time3 min

Shop price inflation in the UK has hit 2.1% year on year in October, the highest in two and a half years, according to the British Retail Consortium. The lobby group warns that retailers are beginning to pass on rising energy and food costs triggered by the Middle East conflict, increasing pressure on Chancellor John Healey ahead of his first budget on Wednesday.

Shop price inflation in the UK has risen to 2.1% year on year in October, up sharply from 1.4% in September, the British Retail Consortium reported. It said food inflation increased to 2.9% from 2.5% in September, while non-food inflation more than doubled from 0.8% to 1.7%. The BRC attributed the rise to retailers passing on increased costs of energy and food ingredients since the Middle East conflict began.

BRC chief executive Helen Dickinson said: “The dam is starting to break on the huge wave of costs retailers have absorbed over the last two years.” She noted that while Halloween discounting was attracting shoppers, supermarkets could no longer keep prices of tins and packets from rising.

The price of Brent crude oil has reached $117 a barrel, well above the $70 average before the US and Israel attacked Iran in February, and gas prices have also risen sharply. Consumer price inflation is running at 3.5%. The Bank of England is expected to raise interest rates next week from 3.75% to 4%, with further increases possible if retail price rises persist.

Chancellor John Healey faces pressure from Labour backbenchers concerned about the high cost of living. A report by Ruth Patrick, a professor of social and public policy at the University of Glasgow, highlights the impact on low-income families. Her study of 100 families found that 73% had shopped in the reduced-items aisle, 62% had changed the food they buy, and 63% had left the heating off even when cold. Petrol prices above £1.75 a litre and diesel above £2 a litre mean that work often does not pay, she said.

One participant, Rosie L, who lives in rural Scotland with her disabled children, said: “It’s getting to a point where I don’t know how we are going to keep managing to run our car.”

Patrick argued that government help so far does not match the scale of the problem. “The budget provides an opportunity to make good on Andy Burnham’s pledge that his will be a ‘cost of living government’,” she said, calling for restoration of child benefit in real terms.

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UK shop price inflation by category, year on year

Source: British Retail Consortium

Analysis

Why This Matters

Rising shop price inflation adds to cost-of-living pressures on UK households, particularly low-income families with disabled children.
The Bank of England is likely to raise interest rates next week, with further increases possible, affecting borrowing costs and mortgage payments.
Wednesday's budget will be a key test of the government's response to the cost-of-living crisis, with backbench pressure for action.

Background

Shop price inflation in the UK had been relatively low for the past year, as retailers absorbed higher costs. However, the spread of the Middle East conflict has driven up energy and ingredient costs, forcing retailers to raise prices. The consumer prices index rose to 3.5% last month, and crude oil and gas prices have surged. The Bank of England's monetary policy committee is expected to respond by raising interest rates.

Key Perspectives

British Retail Consortium: warns that retailers are starting to pass on rising costs, with Helen Dickinson saying “the dam is starting to break”. Ruth Patrick (University of Glasgow): says high fuel prices are making work unaffordable for low-income families, especially those with disabled children, and urges the government to restore child benefit and take long-term steps on social security. Labour backbenchers: concerned about the high cost of living and pressuring Chancellor John Healey ahead of his first budget.

What to Watch

Wednesday's budget: whether Healey announces measures to address cost-of-living pressures, such as benefit changes or fuel duty cuts.
Bank of England interest rate decision next week: a rise from 3.75% to 4% is expected, but the MPC may signal further increases.
The trajectory of energy prices: if oil and gas costs continue to rise, retail inflation could persist or worsen, forcing more policy responses.

Sources

UK shop price inflation ‘highest since 2024’ as retailers struggle to limit price rises · The Guardian

Checked

12 claims in this story checked against 1 source: 8 supported.

Show each claim

SupportedUK shop price inflation is at its highest since 2024.Business | The Guardian: “UK shop price inflation ‘highest since 2024’”
SupportedShop price inflation reached 2.1% year on year in October, its highest level in two and a half years.Business | The Guardian: “Shop price inflation has risen to the highest level in two and a half years, according to the British Retail Consortium, which warned that “the dam is starting to break” when it comes to retailers trying to limit price rises for customers. The lobby group said shop price inflation was 2.1% year on year in October”
Partly supportedThe Middle East conflict triggered the rising energy and food-ingredient costs retailers are passing on.Business | The Guardian: “an indication that retailers were beginning to pass on the rising costs of energy and food ingredients since the Middle East conflict broke out.”
SupportedHelen Dickinson said, “The dam is starting to break on the huge wave of costs retailers have absorbed over the last two years.”Business | The Guardian: “Helen Dickinson, the chief executive of the BRC, said: “The dam is starting to break on the huge wave of costs retailers have absorbed over the last two years.””
SupportedFood inflation rose to 2.9% from 2.5%, while non-food inflation rose from 0.8% to 1.7%.Business | The Guardian: “It said food inflation, which has remained low during the past year, increased this month to 2.9% year on year – against a 2.5% rise in September –”
Partly supportedConsumer price inflation is running at 3.5%.Business | The Guardian: “Gas prices have also risen sharply, pushing the UK consumer prices index to 3.5% last month .”
SupportedThe Bank of England is expected to raise rates next week from 3.75% to 4%, with further rises possible if retail price increases persist.Business | The Guardian: “Bank of England officials are expected to raise interest rates next week from 3.75% to 4%. If the rise in retail prices persists, it is likely to persuade many of the Bank’s nine-member monetary policy committee to raise rates still further in December or the new year.”
Partly supportedThe percentages came from a study of 100 families.Business | The Guardian: “Patrick, who leads Changing Realities , an online project tracking 100 low-income families. She said that in the last month almost three-quarters (73%) of participants in the project had shopped in the reduced-items aisle”
SupportedIn the last month, 73% of participants had shopped in the reduced-items aisle, 62% had changed the food they buy, and 63% had left the heating off even when cold.Business | The Guardian: “She said that in the last month almost three-quarters (73%) of participants in the project had shopped in the reduced-items aisle, while 62% had changed the food they buy and 63% had left the heating off even when cold.”
Partly supportedPetrol prices are above £1.75 a litre and diesel prices are above £2 a litre, meaning work often does not pay.Business | The Guardian: “Petrol prices above £1.75 a litre in many places and diesel often above £2 a litre can mean that work doesn’t pay, according to Patrick”
SupportedRosie L said, “It’s getting to a point where I don’t know how we are going to keep managing to run our car.”Business | The Guardian: “One respondent, Rosie L, who lives in rural Scotland, said: “It’s getting to a point where I don’t know how we are going to keep managing to run our car.””
SupportedRuth Patrick said the budget could make good on Andy Burnham’s “cost of living government” pledge and called for child benefit to be restored in real terms.Business | The Guardian: ““The budget provides an opportunity to make good on Andy Burnham’s pledge that his will be a ‘cost of living government’,” she argued. “Taking sustainable and long-term steps to secure the adequacy of social security would be a vital step here, and there is particular scope in restoring the real value of child benefit”