Rachel Reeves has been urged to “mitigate a swathe of costs” as food inflation is set to rise above four per cent this year, impacting millions of households.
As the cost of living crisis continues, many families are forced to keep to tight budgets and prioritise savings and look for the cheapest options.
Food prices have risen at their third-fastest monthly rate in a year amid hikes in the cost of butter, cheese, eggs and bread, figures show.
Food inflation hit 2.1 per cent last month and is likely to exceed four per cent in the second half of 2025 as companies face rising costs, the BRC has warned.
February’s food inflation figure climbed from 1.6 per cent in January and was above the three-month average of 1.8 per cent, according to the latest BRC-NIQ Shop Price Index.
Breakfast foods are rising the fast
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BRC CEO Helen Dickinson said inflation would likely “rise across the board as the year progresses, with geopolitical tensions running high and the imminent £7billion increase in costs from the autumn budget”, including an increase in National Insurance paid by employers from April.
Further pressure would come from the “poorly designed packaging levy arriving on the doorsteps of retailers” in October, while the Government has also proposed increasing business rates payable on the largest properties from 2026.
She said: “We expect food prices to be over four per cent up by the second half of the year.”
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Dickinson urged the Government to ease cost pressures on retailers to support growth and households.
She called for business rate protections to prevent increased costs for shops and a delay in new packaging taxes to help control inflation.
Mike Watkins, head of retailer and business insight at NielsenIQ, said: “With many household bills increasing over the next few weeks, shoppers will be looking carefully at their discretionary spend and this may help keep prices lower at non-food retailers.
“However, the increase in food inflation is likely to encourage even more shoppers to seek out the savings available from supermarket loyalty schemes.”
Fresh food inflation increased to 1.5 per cent year on year in February, above January’s 0.9 per cent and the three-month average of 1.2 per cent.
Non-food was in 2.1 per cent deflation year on year in February, compared with – 1.8 per cent in January.
Dickinson continued: “If Government wants to keep inflation at bay, enable retailers to focus on growth, and help households, it must mitigate the swathe of costs facing the industry.
Rachel Reeves under fire as food inflation to hit 4 per cent
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“It can start by ensuring no shop ends up paying more than they already do under the new business rates proposals, and delaying the new packaging taxes.”
She said breakfast in particular got more expensive in January “as butter, cheese, eggs, bread and cereals all saw price hikes”.
“Climbing global coffee prices could threaten to push the morning costs higher in the coming months,” she added.