Retailers are warning of renewed pricing pressures in the UK as food inflation edges back up, even while broader consumer price rises moderate — a worrying signal ahead of the upcoming Budget.
According to the Office for National Statistics (ONS), headline consumer price inflation (CPI) fell to 3.6 % in the 12 months to October 2025, but food and non-alcoholic beverages inflation rose to 4.9 %.
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Rising food-price inflation amid easing overall costs
The increase in food inflation comes despite a broader slowdown in price growth. ONS data shows that energy-related costs, particularly gas and electricity, played a key role in pulling down headline inflation, as their annual rate of increase eased sharply.
This shift helped relieve some cost pressures for both consumers and retailers.
However, food prices remain a significant upward contributor to inflation. The ONS report identifies food and non-alcoholic beverages as the largest offset to the falling overall CPI rate.
Retail insight: food inflation back near 5 %
Dr Kris Hamer, Director of Insight at the British Retail Consortium (BRC), noted that “food inflation edged back closer to 5 %, after some respite in September,” calling the rise “unwelcome news for consumers just a week before the Budget.”
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By GlobalDataHe pointed out that while headline inflation has cooled — helped by the new energy price cap — food remains a stubborn drag.
Hamer also highlighted a mixed picture on the ground: “while the cost of the weekly shop remains high, some products including olive oil did fall in price on the month.”
He credited early Black Friday promotions for helping to keep clothing and footwear inflation low, suggesting retailers are using sales dynamics to absorb some inflationary pressure.
Budget risks: business rates and tax burden under scrutiny
As the Budget approaches, the BRC has urged the Chancellor to avoid further retail tax burdens. Hamer warned that “having seen the inflationary impact last year’s Budget, it is essential that the Chancellor does not come knocking at the door of retail once again.”
He argued that reducing the business-rates burden on high-street stores could help retailers invest more, stabilising prices for consumers:
“Fulfilling the manifesto pledge to reduce the business rates burden … will allow retailers to invest more to keep prices in check, benefiting households across the country.”
Industry headwinds remain despite some relief
Despite energy-driven relief for headline inflation, retailers face continued margin pressures from rising food costs.
The BRC’s warning comes at a critical juncture: if food inflation remains near 5 %, consumers may cut back or trade down, while retailers may struggle to absorb costs without eroding profits.
Analysts will closely watch how the Budget addresses business rates, retailer tax burdens, and support for consumers.
Any misstep could amplify price pressures rather than contain them — especially in a sector where weekly shopping is already under strain.
