UK households are feeling the pinch as food prices continue to surge, driving overall inflation well above the Bank of England’s target and putting increasing pressure on family budgets. Official figures released on September 17, 2025, by the Office for National Statistics (ONS) revealed that food price inflation climbed for the fifth consecutive month in August, with the annual rate for food and non-alcoholic drinks hitting 5.1%. This marks the fastest pace of food price growth since early 2024, and it's affecting everything from beef and butter to chocolate and coffee.
While the headline rate of inflation remained steady at 3.8% in August—the same as July—this stability masks the growing strain on consumers, particularly those on lower incomes. The ONS noted that the cost of airfares rose less than a year ago, which helped keep the overall inflation rate from climbing further. However, this moderation was offset by rising prices at the pump and hotel accommodation costs that fell less than expected compared to last year. As Grant Fitzner, ONS chief economist, put it: "The cost of airfares was the main downward driver this month with prices rising less than a year ago following the large increase in July linked to the timing of the summer holidays. This was offset by a rise in prices at the pump and the cost of hotel accommodation falling less than this time last year."
The pain at the checkout is especially acute for staple foods. Over the past year, beef and veal prices have soared by nearly 25%, butter by almost 19%, and both chocolate and coffee by 15.4%. Whole milk is also up by 12.6%. These increases have outpaced wage growth, which the ONS reported as 4.7% between May and July, meaning many families are struggling to keep up with the rising cost of living. Kris Hamer, director of insight at the British Retail Consortium (BRC), highlighted the impact: "With food inflation now outpacing wages, many families will be struggling with the rising cost of living."
Tom Egan, co-founder of Coosh Bakery in Nottingham, has seen these pressures firsthand. He explained that adverse weather in cocoa-growing countries like Ghana has "more than doubled the price we get from our suppliers." Where the bakery once paid around £60 for 10kg of cocoa, the price has now shot up to over £150. Butter prices have also risen sharply, with Egan noting a 50% increase over the year, largely due to reduced milk imports into the UK. "The actual quantity of milk that is being imported into the UK has gone down so obviously supply and demand has meant the price has surged on things like butter," he said. The rise in National Insurance Contributions (NIC) has also "stung a little bit," making the bakery more cautious about investing in productivity-boosting equipment and technology.
Economists point to a combination of factors behind these rising food bills. Supermarkets are passing on the government’s increases in the minimum wage and NIC to shoppers, contributing to higher prices at the tills. Yael Selfin, chief economist at KPMG UK, observed, "Since April, the rise in inflation has been driven largely by domestic policy choices, including the increase in employers' National Insurance Contributions. These higher costs have been passed on by businesses to consumers, feeding through into higher headline inflation."
Despite the government’s efforts to ease the burden, the overall inflation rate remains well above the Bank of England’s 2% target. Chancellor Rachel Reeves acknowledged the challenges facing families, stating, "I know families are finding it tough and that for many the economy feels stuck. That’s why I’m determined to bring costs down and support people who are facing higher bills." Reeves pointed to measures such as raising the National Living Wage, extending the £3 bus fare cap, and expanding free school meals as part of the government’s "Plan for Change" to support households while aiming for a more stable economy.
Yet, the business community remains wary of further government intervention. The British Chambers of Commerce (BCC) has called on the government to avoid new tax rises in the upcoming Autumn Budget, warning that firms are already grappling with higher wage costs, increased NIC, and tariffs. Stuart Morrison, BCC research manager, commented, "Businesses will be worried by inflation holding at 3.8% at a time when cost pressures continue to bite, especially on wages. Firms are clear that April’s rise in national insurance, continued strong wage growth and higher tariffs are all eroding their operating margins."
Comparatively, the UK’s inflation rate is "significantly higher" than that of other major European economies. In August, France’s inflation stood at 0.8%, while Germany’s was 2.1%. This divergence has led some economists to label Britain as an "outlier" in recent months, with domestic policy choices playing a central role in keeping inflation elevated.
The Bank of England has responded by cutting interest rates five times since August 2024, bringing borrowing costs down to 4%. However, with inflation proving stubborn, or "sticky," as some analysts put it, there is growing uncertainty about the likelihood of further rate cuts this year. The central bank is expected to hold rates steady at its next meeting, with some experts predicting that inflation could even climb to 4% going into the autumn. Scott Gardner, investment strategist at Nutmeg, noted, "With forecasts suggesting inflation could rise even further in the short-term and hit 4% going into the autumn, the cost-of-living strain on household finances will persist in the months ahead. In short, already sticky inflation is likely to get stickier."
The Food and Drink Federation warned that current price increases are "steeper than anything in recent decades" and projected that food inflation could reach 5.7% before the end of the year. Meanwhile, the ONS’s broader measure of inflation, CPI including owner occupiers’ housing costs (CPIH), sat at 4.1% for the 12 months to August, slightly down from 4.2% in July, but still uncomfortably high for many.
For consumers, the message from financial experts is clear: vigilance is key. Derek Sprawling, head of money at Spring Savings, advised, "While the inflation rate holding at 3.8 per cent may appear stable, it still poses a challenge for savers. At this level, the real value of their money continues to be chipped away. Now is not the time for complacency and savers should be proactive in reviewing their accounts. With many still earning minimal interest, switching to a savings product that offers a return above inflation is key to preserving financial wellbeing."
As the UK heads into the autumn, households and businesses alike are bracing for continued cost pressures. With food prices rising faster than wages and the specter of further inflation on the horizon, the months ahead look set to test the resilience of both consumers and policymakers.
