UK shop price inflation hits 1.4% as Rachel Reeves' Budget drives up costs

Shop price inflation in the UK jumped to 1.4% in September as rising National Insurance, wage costs, and global pressures pushed prices up for Brits, new figures show. The increase from August's 0.9% came despite food inflation holding steady at 4.2%, and was largely driven by rising non-food prices, according to the British Retail Consortium (BRC)-NIQ Shop Price Monitor.

Price rises were particularly noticeable in DIY and gardening goods, while discounts on back-to-school electronics, such as laptops, provided some relief to shoppers. Meanwhile, food price inflation remained at 4.2% after seven consecutive months of increases.

However, the BRC said that increased labour and energy costs continued to put pressure on many farmers, particularly those in cattle farming, with dairy and beef prices remaining high.

Helen Dickinson, chief executive at BRC, said: "A year and a half of non-food deflation looks set to come to an end, as inflationary pressures spread beyond food. Households are finding shopping increasingly expensive. The impact on retailers and their supply chain of both global factors and higher National Insurance and wage costs is playing out in prices for consumers."

"The new packaging tax, set to take effect in October, will put further upward pressure on inflation.

"While retailers continue to absorb higher costs as much as possible and deliver value to customers, any further tax rises in the upcoming budget would keep shop prices higher for longer."

Ms Dickinson added: "Ultimately, it is British households who will bear the consequences, positive or negative, of the Chancellor's decisions."

Mike Watkins, head of retailer and business insight at NIQ, said: "With inflationary pressures persisting, many shoppers remain concerned about their personal finances and are becoming increasingly price-sensitive.

"As a result, retailers are likely to continue offering promotions and deals in the coming weeks to help maintain sales momentum."