Cost of living: UK food prices rise at fastest rate since 2008 global financial crash

The rapidly rising price of food pushed August shop price inflation to the highest level in over a decade. Credit: PA

Household budgets are being squeezed further after the price of food rose at its fastest rate since 2008 in August as the war in Ukraine raised costs for farmers.

Prices in shops rose by 5.1%, a big increase from 4.4% in July, marking a new record since the British Retail Consortium (BRC) and NielsenIQ index started in 2005, three years before the global financial crash.

The overall figure was driven by food inflation accelerating to 9.3%, up from 7% last month, as food producers passed on hikes in the cost of fertiliser, animal feed, wheat and vegetable oils, much of which is produced in Russia and Ukraine.

The annual increase in fresh food prices jumped to 10.5%, up from 8% in July, with products such as milk and margarine seeing the biggest rises.

The rise in shop prices is contributing to wider UK inflation, which some analysts are predicting could top 18% in 2023.

Inflation - the rate of increase in prices for goods and services - is currently at 10.1%. If a loaf of bread costing £1 rises in price by 5p, the bread inflation is 5%.

How much have some of the staples increased by?

  • Bread and cereals : Earlier this month, the ONS said that a loaf of sliced white bread now costs £1.24 on average, an increase of 18 pence compared with last July.

  • Milk : The average cost of a pint of milk rose to 59 pence in July. That rose up from 42 pence in the same month last year.

  • Cheese: 350g cheddar cost £2.54 on average, up from £2.16 last July. There was a 17.9% increase in the average price of cheeses and curds over the last 12 months to July.

  • Eggs: The cost of eggs increased by an average of 14.6% since July 2021. That means if a carton of 6 eggs cost £1 in July 2021, it would now cost around £1.15.

BRC chief executive Helen Dickinson said the situation is bleak, but added that retail business will help consumers through offering discounts to vulnerable groups, fixing prices of essential items and expanding value ranges.

“However, as retailers also grapple with growing cost pressures, there is only so much they can shoulder," she warned.

“The new prime minister will have an opportunity to relieve some of the cost burden bearing down on retailers, like the upcoming increase in business rates, in order to help retailers do more to help their customers.”

Sainsbury's has signalled its commitment to lowering food prices. Credit: PA

Sainsbury’s has said it will pump £65 million into its pricing next month amid ratcheting pressure on customers’ budgets.

The UK’s second largest grocery chain said £60 million of its latest cash injection will go towards food prices in September. It said this will predominantly go towards the Price Lock campaign which freezes the price of a raft of its most popular products. Around 2,000 food products and household items have had their prices fixed for at least eight weeks, including a number of own label lines.

Want a quick and expert briefing on the biggest news stories? Listen to our latest podcasts to find out What You Need To Know

Aldi and Lidl have seen a jump in customer demand in recent months as cash-strapped shoppers have sought better deals for groceries as soaring energy bills continue to weigh on household spending.

Mike Watkins, head of retailer and business insight at NielsenIQ, added: “We can expect this level of food inflation to be with us for at least another six months but hopefully some of the input cost pressures in the supply chain will eventually start to ease.

“However, with further falls in disposable incomes coming this autumn as energy costs rocket again, retail spend will come under pressure in the all-important final quarter of the year.”