Britain's largest retailers faced a challenging July as rising food prices drove cash-strapped shoppers away from the high street. The British Retail Consortium (BRC) reported on Tuesday that food prices rose by 4% in July from a year earlier, up from 3.7% in June and above the three-month average of 3.5%.
The increase was driven by staple items such as meat and butter. Official figures earlier this month showed meat prices jumped 17% in the year to June, while butter, which had been falling in price between 2023 and 2024, rose by 18.2% over the past year. Cupboard food prices climbed 5.1% compared with a year earlier, up from 4.3% in June.
A separate survey by the Confederation of British Industry (CBI) found that retailers struggled through the summer months, blaming economic uncertainty for persuading customers to hold back spending. The balance of shops reporting a decline in sales improved slightly from -46% in June to -34% in July, but retailers expect a similar pace of decline next month.
Martin Sartorius, principal economist at the CBI, said higher price pressures, driven by rising labour costs, and economic uncertainty “continued to weigh on household demand and contributed to sales volumes falling since October 2024”. He added that households were saving rather than spending, intensifying difficulties for high street and online retailers.
Helen Dickinson, chief executive of the BRC, noted that rising prices of meat and tea pushed up overall food price inflation for a sixth consecutive month, both affected by tighter global supplies. Total shop price inflation, including non-food items, rose to 0.7% in July year on year, up from 0.4% in June. However, she pointed to discounts in fashion and furniture as bright spots.
In contrast to these industry surveys, official figures from the Office for National Statistics last week showed retail sales rose 0.9% in June, boosted by sunny weather and events like Wimbledon and concerts. The divergence highlights the ongoing pressure on household budgets from rising grocery costs.
