Prices in UK stores rising due to higher taxes and increased cost of wholesale purchases

In June, year-on-year inflation in UK stores reached 0.4%, according to the British Retail Consortium (BRC). The figure stood at -0.1% a month earlier. The rise was driven by a 3.7% increase in food prices, which was the strongest in annual terms since March 2024.

As the BRC said, the figures reflect the impact of the government's new budget measures to raise the minimum wage and increase taxes for employers. At the same time, supermarkets in the country are facing higher wholesale food prices driven by geopolitical tensions and climate change, Bloomberg notes.

The agency adds that such indicators make it harder for the Bank of England to bring inflation back to its 2% target. Nevertheless, so far the central bank representatives are still sure that interest rate hikes will be effective. 

Overall UK consumer price inflation, which covers a wider range of spending including household bills, was 3.4% in May, according to the Office for National Statistics. This is higher than the March level of 2.6%.