UK inflation, driven by surging food and transport costs, rose to 3.8 % in July 2025.
Food inflation stands at 4.9 %, signalling mounting pressure on household budgets and placing the retail sector under further strain.
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How food inflation is piling on cost-of-living pressure
Families across the UK are feeling the pinch as food inflation reaches 4.9 %, up from levels considerably lower just months earlier. Kris Hamer, Director of Insight at the British Retail Consortium, highlights that:
“Households are once again seeing the cost of their weekly shop climb, with food inflation now up by 1.9 percentage points in just four months.”
This rapid rise in food prices is a key contributor to headline inflation and is exacerbated by higher transport costs, compounding cost-of-living concerns.
Broader inflation drivers and limited relief for shoppers
Transport costs, especially air fares, contributed significantly to inflation’s climb. July saw a record monthly spike in air fares, a surge attributed to the timing of school-holiday travel bookings.
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By GlobalDataOther pressures at the checkout include employment-related costs—affected by government policy—as well as poor harvests and global instability. These combined factors are intensifying inflationary pressure.
There was brief respite in items such as olive oil, butter and cheese, which saw price declines during the month, and clothing and footwear inflation remained subdued—though relief remains fragile.
Retail cost pressures highlighted by Claire’s administration
Retailers are struggling to absorb rising costs. Hamer notes that attempts to shield consumers from price rises are being eroded by the growing range of cost pressures they face.
The administration of high-street chain Claire’s Accessories underlines how intensifying retail cost pressures are affecting businesses. More than 2,150 jobs are at risk following the appointment of administrators for the UK and Ireland operations.
The company continues to trade its 306 stores while exploring viable options, including a possible sale.
