UK food inflation rises for the fourth consecutive month; one in ten UK adults has no savings; government borrowing exceeds expectations, with further tax hikes expected this autumn; the UK sees a robust property transaction trend.

UK food inflation has risen for the fourth consecutive month, driven by higher costs for fresh produce—including beef. Data shows that UK food inflation has risen for the fourth month in a row, propelled by rising costs for fresh agricultural products, including beef. According to the latest store price data from the British Retail Consortium (BRC), annual food price inflation reached 2.8% this month, up from 2.6% in April. However, overall prices remain in deflation—down 0.1% year-on-year, unchanged from last month—as non-food items’ costs fell, particularly electrical goods, with retailers cutting prices ahead of potential Trump-era tariffs to stimulate business. The BRC’s monthly retail price index—produced jointly with research firm Nielsen IQ—found fresh food to be the largest contributor to the rise. Helen Dickinson, CEO of the BRC, said: “Rising fresh food prices are the main driver—and red meat consumers may already have noticed, as supermarket retail prices have increased alongside rising wholesale beef prices.” Compared to May last year, non-food item costs fell by 1.5%, but the BRC warned that deflation is slowing in categories such as fashion and furniture, as retailers begin scaling back promotions. The BRC noted that the broader deflationary environment is under pressure, as retailers absorbed a £5 billion cost shock last month from increased employer National Insurance contributions and the uplift in the National Living Wage. Later this year, retailers will also face an additional £2 billion in costs linked to the new packaging tax. The BRC cautioned that rising costs may force retailers to pass price increases on to consumers—meaning households must prepare for tougher times ahead as inflation accelerates. These mall-level retail price figures were released amid surging headline economic inflation. Last week, the UK Office for National Statistics (ONS) reported that annual inflation jumped to 3.5% in April—higher than expected and the highest in over a year—following sharp increases in water, energy, and council tax bills. This surge was driven by higher gas, electricity, water, and transport costs—leading to last month being dubbed the “awful April”. Last Friday, energy regulator Ofgem announced that the cap on gas and electricity bills will fall by 7% from July—saving the average dual-fuel household £129 per year. A rare piece of good news, and with Ofgem set to review the cap again in September, the Bank of England earlier this month forecast summer inflation would peak at an average of 3.5%. One in ten UK adults has no savings, while millions carry credit card debt New data reveals that one in ten UK adults holds no cash savings—leaving them highly vulnerable to sudden increases in living expenses and highlighting their inability to absorb unexpected costs. It is estimated that more than 13 million people across the UK face severe financial hardship—including mounting debt, negligible savings, or an inability to meet basic living costs. While the figure of 10% having zero savings is deeply concerning, findings from the Financial Conduct Authority (FCA) suggest an even larger proportion lack resilience against any income shock: an additional 21% hold less than £1,000 in savings.

UK March retail sales data: consumption constrained, mired in a 'cost-of-living crisis'.

Following the data release, the pound sterling edged down 0.3% against the US dollar to $1.2405, with little immediate volatility. However, traders have increased bets on interest rate cuts later this year—the market now fully prices in a 25-basis-point cut by the Bank of England in September. The UK Office for National Statistics (ONS) reported that retail sales rose by 1.9% across the first quarter, contributing 0.09 percentage points to GDP growth. Surveys indicate the broader UK economy is expected to expand by 0.2% in Q1. Within the weak data, fuel sales provided some support to prices. Excluding automotive fuel, overall sales in March fell by just 0.3%. Moreover, March’s retail sales were dampened by heavy rainfall during the first half of the month. Retailers broadly report having gradually settled into a more normal consumption pattern compared to pandemic-era behaviour. Commenting on the underwhelming figures, Heather Bovill, Senior Statistician at the ONS, said: “Sales rose at hardware stores, furniture shops, petrol stations, and clothing retailers—but these gains were offset by falling food sales, with department store retailers citing price increases as a drag on transactions.” Phil Monkhouse, UK Country Manager at financial services firm Ebury, remarked: “Today’s retail sales data is somewhat disappointing, dashing retailers’ hopes of an Easter footfall rebound. With retailers now confronting two consecutive months of stagnation, the glimmer of optimism following January’s unexpectedly strong rebound appears increasingly faint.” Kris Hamer, Director of Insights at the British Retail Consortium, added: “With the cost of living remaining stubbornly high, consumer spending remains constrained—sales of big-ticket items like furniture continue to perform poorly.”

UK Retail Body Warns 'Dam is Starting to Break' on Price Rises

20 hours ago

The British Retail Consortium warned retailers cannot absorb rising costs, citing food price inflation at 2.9% driven by energy, transport, and packaging levies.

reuters

2026-10-26

UK Retail Body Warns 'Dam is Starting to Break' on Price Rises

UK Retail Body Warns 'Dam is Starting to Break' on Price Rises

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