Food inflation in the UK has risen for the fourth month in a row, reaching an annual rate of 2.8% in May, up from 2.6% in April, according to the British Retail Consortium (BRC). The increase was driven by rising costs of fresh produce, particularly red meat, with steak prices rising due to higher wholesale beef costs.
Overall shop prices remained in deflation, 0.1% cheaper than a year ago, as non-food goods fell by 1.5% compared to May last year. However, the BRC warned that deflation was slowing in categories such as fashion and furniture as retailers reduced promotions.
Helen Dickinson, BRC chief executive, noted that fresh foods were the main driver of food inflation, and that red meat eaters may have noticed their steak becoming more expensive. She added that retailers are under pressure from a £5bn cost hit from increased employer national insurance contributions and the rise in the national living wage, as well as a forthcoming £2bn rise in costs from a new packaging tax.
The BRC warned that these cost increases could force retailers to pass on price rises to consumers, leading to more difficult times ahead. The data follows a surge in UK inflation to 3.5% in April, the highest in over a year, driven by increases in water bills, energy costs, and council tax.
However, there was some positive news as energy regulator Ofgem announced a 7% reduction in the energy price cap from July, equivalent to £129 a year for the average household. The Bank of England forecasts inflation will peak at an average of 3.5% over the summer.
