Consumer confidence has dipped as the latest Consumer Prices Index (CPI) figures show that food inflation rose above 5% in the 12 months to August 2025.
While the CPI in the 12 months to August 2025 remained unchanged from July at 3.8%, the rate for food and non-alcoholic beverages was 5.1%, up from 4.9% in July, the Office for National Statistics (ONS) has revealed. This was the fifth consecutive increase in the annual rate and the highest recorded since January 2024, although key staples cereals and pasta fell in price on the month.
Rising inflation has knocked consumer confidence with BRC-Opinion data revealing that expectations for the state of the UK economy over the next three months have worsened from -32 in August to -36 in September. Consumers’ personal financial situation expectations had fallen to -7 in September, down from -6 in August, while their their expectations of personal spending on retail rose slightly to +5 in September, up from +4 in August.
Dr Kris Hamer, Director of Insight at the British Retail Consortium, said:
“Food inflation climbed above 5% in August for the first time in 18 months as rising employment costs and poor harvests drove up retailers’ costs. With food inflation now outpacing wages, many families will be struggling with the rising cost of living.
“Households across the country are noticing the increasing cost of their weekly shop. Retailers are doing everything they can to deliver great value for their customers, but are unable to absorb the £7 billion in costs they have been landed with this year thanks to rising costs of National Insurance, higher National Living Wage, and a new packaging tax. The Chancellor can help turn the tide at the Budget by delivering a meaningful business rates reduction, with no shop paying more as a result. If the Government instead chooses to burden the industry with more costs, then it will be households who feel the pinch as they go about their weekly shop.”
Helen Dickinson, Chief Executive of the British Retail Consortium, said:
“Confidence among Millennials (28-43) fell dramatically this month, as their expectations for both the economy and their own finances fell by double digits. The same generation also cut spending expectations for the months ahead, though this was largely offset by improvements for Gen Z, who remain the most optimistic. Worries about the Budget, combined with the increase in the cost of living, have eroded confidence, with little sign that inflation will come down soon.
“Inflation is now one of the biggest concerns among the public, with food inflation expected to rise to 6% by the end of the year. All eyes are now firmly locked on the 26 November, and what the Chancellor will announce. The Government can help mitigate inflation, improve the cost of living, and raise consumer confidence, by ensuring the upcoming business rates reforms offer a meaningful reduction to retail business rates, while ensuring no shop pays more as a result.”
