Retailers Grapple with Rising Costs as Shop Prices Rebound to Inflation

Price Hike Alert: Shop Prices Finally Catch Up, but Food Inflation is Still on the Rise

June 2025 sees shop prices climb back into inflation territory, and that’s a big win after a spell of deflation.

Inflation Snapshot

Shop prices up 0.4 % YoY in June – a rebound from -0.1 % in May. Above the 3‑month average of 0.1 %
Non‑food goods: -1.2 % YoY in June versus -1.5 % in May. Still over the 3‑month average of -1.4 %
Food prices: +3.7 % YoY in June, topping May’s +2.8 %. Above the 3‑month average of 3.1 %
Fresh food: +3.2 % YoY in June, up from 2.4 % in May. Above the 3‑month average of 2.5 %
Ambient food: +4.3 % YoY in June, higher than 3.3 % in May. Above the 3‑month average of 3.8 %

What’s Driving the Numbers?

Helen Dickinson, Chief Executive of the BRC, sums it up: “After last autumn’s Budget swoosh, our shops have finally hit inflation again—something’s been missing for nearly a year.”

Fresh produce: meat prices are high because of big wholesale costs and pricier labor.
Fruit & veg: Sunshine is great, but the hot, dry spell has trimmed harvests, nudging prices up.
Non‑food items: Retailers are slashing prices on DIY and gardening gear, so shoppers can fully enjoy the sunshine.

“Retailers warned that the Budget’s new Employer National Insurance and National Living Wage hikes would push prices up. We predicted a boom in food inflation, and it’s accelerated by geopolitical tensions and climate change. The Government must help ease these pressures if we want prices to stay in check. Business rates reform could be the perfect lever, but it’s crucial that no shop ends up paying more.”

Industry Insight

Mike Watkins from NielsenIQ shares his take: “Price climbs stem from the broader economy and shifting supply chains. A sunny spell boosts demand, but if shoppers tighten their wallets later in the year, we’ll see more aggressive value messaging from retailers over summer.”