British shop prices rose at their fastest pace since February 2024 in August, with higher energy and input costs lifting food prices while the global AI boom pushed up the cost of electronics components.
UK retailers raised prices at the fastest annual pace in more than two years in August, adding to signs of renewed inflationary pressure as higher energy costs and surging demand for technology components filtered through to consumers.
The British Retail Consortium’s (BRC) shop price index rose 1.5 per xe year-on-year in August, accelerating sharply from 0.9% in July and marking its highest reading since February 2024.
The increase was driven by both food and non-food categories, with retailers facing higher energy, commodity and other input costs.
Food price inflation climbed to a four-month high of 2.8 per cent in August, up from 2.2 per cent in July, according to the BRC. The impact has been particularly visible in ambient foods, which tend to involve imported and processed products and are therefore more exposed to energy and input costs.
Non-food inflation also accelerated significantly, rising to 0.9 per cent from 0.2 per cent in July, its highest level since February 2024.
Electronics emerged as a notable source of price pressure as the artificial intelligence investment boom drives demand for memory chips, storage and other components that are also widely used in consumer devices.
BRC Chief Executive Helen Dickinson said higher energy, commodity and input costs were increasingly feeding through into retail prices, particularly for processed food. She also pointed to rising electrical goods prices as the AI boom increases the cost of memory and storage components.
More from BusinessThe latest figures could add to concerns about the UK inflation outlook. The broader consumer price index, measured by the Office for National Statistics and covering a wider range of goods and services, rose to a four-month high of 2.9% in July.
The Bank of England expects headline consumer inflation to climb further, peaking at 3.2 per cent in October and November. Food inflation is projected to reach 3.5 per cent in December.
The renewed acceleration in shop prices could complicate the inflation picture for policymakers as they assess the path for interest rates, particularly if higher energy and commodity costs continue to feed into consumer prices in the coming months.
