BRC: Inflation Puts Household Budgets Under Pressure

Responding to the latest CPI inflation figures, which show headline inflation rising to 3.8% and food inflation rising to 4.9%, Kris Hamer, Director of Insight at the British Retail Consortium, said:

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 surge has been a key driver behind headline inflation, alongside a rise in transport costs, piling fresh pressure on families already being forced to cut back. The Bank of England has been clear that government policies, which have driven up the costs of employment, are fuelling price rises at the till, while poor harvests and global instability have also added further cost pressures. There was some limited relief for consumers as clothing and footwear inflation remained subdued while certain everyday food items such as olive oil, butter and cheese did fall in price on the month. 

Retailers have been doing everything they can to prevent price rises but the swathe of costs they now face has left them no room to manoeuvre. The recent administration of Claire’s Accessories is yet more evidence of the pressure the industry is currently facing. The Chancellor must avoid burdening the industry with even more taxes this autumn. Instead, she has an opportunity to encourage much needed investment in our high streets by ensuring the planned reforms to business rates offer a significant reduction for retail properties, and leave no shop paying more.

Confederation of British Industry

Martin Sartorius, Principal Economist, CBI, said: 

“Inflation ticked up slightly in July, broadly in line with the Bank of England’s expectations. Higher energy and regulated prices continue to put upward pressure on inflation, and the increase in labour costs following last year’s Autumn Budget are also feeding through.  

“Today’s inflation data will reinforce the Monetary Policy Committee’s cautious approach to cutting interest rates going forward. While inflation is projected to ease next year, the risk of second-round effects means that the MPC will not race to loosen policy in the near term. We expect that the MPC will keep rates unchanged in September, as it waits to see how inflation and labour market data develop going into the autumn.” 

ONS CPI Data

• The Consumer Prices Index including owner occupiers' housing costs (CPIH) rose by 4.2% in the 12 months to July 2025, up from 4.1% in the 12 months to June.
  
  
• On a monthly basis, CPIH was little changed in July 2025, the same as in July 2024.
  
  

• The Consumer Prices Index (CPI) rose by 3.8% in the 12 months to July 2025, up from 3.6% in the 12 months to June.

• On a monthly basis, CPI rose by 0.1% in July 2025, compared with a fall of 0.2% in July 2024.

• Transport, particularly air fares, made the largest upward contribution to the monthly change in both CPIH and CPI annual rates; housing and household services, particularly owner occupiers' housing costs, made a large, partially offsetting, downward contribution in CPIH.

• Core CPIH (CPIH excluding energy, food, alcohol and tobacco) rose by 4.2% in the 12 months to July 2025, down slightly from 4.3% in the 12 months to June; the CPIH goods annual rate rose from 2.4% to 2.7%, while the CPIH services annual rate was unchanged at 5.2%.

• Core CPI (CPI excluding energy, food, alcohol and tobacco) rose by 3.8% in the 12 months to July 2025, up slightly from 3.7% in the 12 months to June; the CPI goods annual rate rose from 2.4% to 2.7%, while the CPI services annual rate rose from 4.7% to 5.0%.

CPIH annual and monthly inflation rates by division: UK, July 2024, June 2025, and July 2025

Source : BRC; CBI; ONS

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