UK retailers are under renewed pressure to hold down prices as shop inflation rises again, driven by higher energy costs and ongoing global supply chain disruption.
According to the British Retail Consortium (BRC), retailers are continuing to absorb significant cost increases where possible, but warn that sustained pressure is making it harder to protect consumers from higher prices.
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The latest BRC shop price monitor shows annual inflation increasing to 1.2% in May 2026, up from 1.0% in April. Food inflation has eased to 2.7%, its lowest level in a year, but non-food categories such as furniture, health and beauty products have recorded upward pressure linked to raw materials and shipping costs.
Inflation pressures
Retailers say higher costs are increasingly driven by energy markets and geopolitical disruption, particularly in the Middle East. These factors are pushing up electricity, gas, transport and logistics costs across supply chains.
Helen Dickinson, chief executive of the BRC, said rising energy-related charges remain a key challenge. She highlighted that “reducing the non-commodity charges, taxes and levies that make up more than two-thirds of energy bills… would help keep inflation down”.
Industry data suggests that even where inflation is stabilising in some areas, underlying cost pressures remain broad-based, with businesses facing higher expenses for shipping, manufacturing inputs and distribution.
The BRC has also warned that inflation is likely to remain “sticky” throughout 2026 as retailers absorb ongoing policy costs and regulatory changes alongside global market shocks.
Retail response
Retailers across the UK are attempting to limit price increases through promotions, discounting and tighter cost management. Competitive pricing has been a key factor in slowing inflation in earlier months of the year, particularly in non-food sectors.
Helen Dickinson said: “Fierce competition between retailers kept price rises in check,” noting that discounting and seasonal promotions have helped slow price growth in some categories despite rising input costs.
However, retailers also warn that such measures may not be sustainable if energy and transport costs continue to rise. Industry figures say margins remain under pressure, limiting the ability of businesses to continue absorbing increases without passing them on to consumers.
Outlook for consumers
The BRC and other industry groups expect further upward pressure on prices over the coming months, with energy costs and supply chain disruption likely to feed through into retail pricing.
Food inflation, while currently lower than earlier peaks, remains sensitive to global commodity and fertiliser costs. Non-food inflation is expected to remain volatile, particularly in categories dependent on imported goods and international shipping.
Helen Dickinson has also warned that, while retailers will continue to “do everything they can to keep prices down”, some cost increases will “inevitably filter through to the till”.
Economists and retail analysts broadly expect UK shop prices to remain under pressure through the second half of 2026, as external cost shocks and domestic policy pressures continue to affect business operating costs.
