New research shows food prices surged for the fifth consecutive month in August, increasing the cost of groceries at the fastest pace since early 2023.
Today (17th September) the Office for National Statistics (ONS) published new research much to the dismay of UK households. Their figures show the cost of food and non-alcoholic drinks rose by 5.1% over the year to August 2025. Products including beef, butter, milk and chocolate experienced a particularly steep increase.
What’s more, the data outlines headline inflation remained unchanged – stayed at 3.8% from July – and energy prices eased slightly. Though the cost of energy is due to increase by 2% from the beginning of next month.
Economists have cited recent domestic policy decisions, including increasing the national minimum wage and employers’ National Insurance contributions, as reasons why the cost of food has surged. Businesses have warned these higher costs are being passed on to consumers.
According to the ONS the average wage grew by 4.7% between May and July this year, which isn’t high enough to keep up with the growing price of food.
Kris Hamer, director of insight at the British Retail Consortium (BRC), said: ‘With food inflation now outpacing wages, many families will be struggling with the cost of living.’
Commenting on the new research, Chancellor Rachel Reeves acknowledged that ‘Families are finding it tough and for many the economy feels stuck.’ Ahead of her autumn budget, which is due to be delivered on 26th November, she pledged to ‘bring costs down’ and provide support.
On the topic of announcements, members of the Bank of England (BoE) are due to convene on Thursday and decide on whether to cut interest rates. Analysts believe the Bank will hold rates at 4% as inflation remains above their 2% target.
Daniel Austin, CEO and co-founder of ASK Partners, said the ‘unchanged UK inflation points to a bumpy and uncertain road ahead.’
‘Policymakers are caught between volatile global conditions, exacerbated by ongoing uncertainty, and shifting domestic policy. Markets still expect another rate cut before year-end, but with the autumn budget looming, the MPC is likely to hold fire until there’s clarity on the Chancellor’s fiscal plans. A premature move would be a leap of faith,’ Daniel continued. ‘For homeowners and buyers, the hope of lower borrowing costs lingers, yet persistently elevated fixed mortgage rates mean relief is not imminent.
‘With inflation unlikely to return to the 2% target this year, mortgage pressures look set to persist. Investors and developers will also be watching closely. Resilient sectors such as co-living, build-to-rent and storage continue to attract capital thanks to tight supply and strong demand, but a stable downward inflation trend is critical to unlocking broader activity. Should the predicted BoE cuts arrive, they could act as a spark, but for now, only the most agile investors may find opportunities in a cooling market.’
Photo by nrd via UnSplash
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