UK retailers warn price rises are speeding up as costs pile up

what happened

Britain's main retail trade body, the British Retail Consortium, said shops are increasingly struggling to absorb rising costs. Its data showed shop prices in October were 2.1% higher than a year earlier, the strongest increase since February 2024, up from 1.4% in September.

BRC chief executive Helen Dickinson said the "dam is starting to break" under costs retailers have absorbed over the past two years, and urged finance minister John Healey to cut property taxes and employment costs in his first annual budget, due on Wednesday. BRC food price inflation rose to 2.9% in October from 2.5%, and non-food inflation climbed to 1.7% from 0.8%.

The BRC blamed higher transport and energy costs, rising employment costs and packaging levies.

why it matters

For markets, the concern is that cost pressures are starting to reach shop prices. Bank of England Governor Andrew Bailey said earlier this month that businesses had so far largely absorbed higher energy costs, which reduced the need for rate hikes. If retailers begin passing costs on to customers, that could raise questions about the path of interest rates and weigh on sterling and UK gilts.

market impact

Sterling and UK gilts: faster retail price rises add pressure on Bank of England rate expectations

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