Published by Global Banking and Finance Review
Posted on August 25, 2025
LONDON (Reuters) -British shop prices rose this month by the most since March last year, potentially adding to the Bank of England's worries about how long the country's high inflation problem is likely to last.
Shop prices rose by 0.9% compared with August 2024, driven by a jump of 4.2% in food prices, the biggest since February last year, the British Retail Consortium said on Tuesday.
The BoE said earlier this month that rising food inflation was driving up inflation expectations, something that could fuel demands for higher pay and fuel future inflation.
Britain's headline consumer price inflation rate - which covers a wider range of goods and services than the BRC measure - hit an 18-month high of 3.8% in July and the BoE thinks it will reach 4% in September before edging down.
Helen Dickinson, chief executive of the BRC, said staples such as butter and eggs saw significant increases in price due to high demand, tightening supply and increased labour costs, while poor cocoa harvests had pushed up the cost of chocolate.
The heads of leading retailers wrote to finance minister Rachel Reeves last week say that further tax increases on them - after an increase in employers' social security contributions in April - could ruin the government's promise to improve living standards.
The BRC data was based on prices collected between August 1 and August 7.
As well as the highest headline inflation rate among the big, rich Group of Seven economies, the BoE is also worried about signs of a slowdown in Britain's labour market.
Separate data published on Tuesday by jobs website Adzuna showed demand for staff fell in July. Vacancies were down a monthly 1.2% and there was a 0.3% drop in advertised salaries, reversing June's pickup in demand.
Adzuna co-founder Andrew Hunter said there had been a further fall in healthcare roles, contrasting with continued demand in sectors such as construction.
Compared with July last year, vacancies edged up 0.3% while advertised salaries were almost 9% higher, the data showed.
(Writing by William Schomberg; editing by David Milliken)
