UK households are facing continued pressure on their grocery bills as food inflation rose for the fourth consecutive month in May 2025. Despite overall shop prices remaining relatively flat, the increasing cost of food, particularly fresh items and meat, is a growing concern for consumers and retailers alike.
Food Inflation Continues its Upward Trend
The latest data from the British Retail Consortium (BRC)-NIQ Shop Price Index for May 2025 reveals a persistent rise in food prices:
- Overall Food Inflation: Food prices were 2.8% higher in May 2025 compared to a year ago, accelerating from April’s 2.6% increase.
- Fresh Food Prices Surge: Fresh food inflation saw a notable jump, with prices 2.4% higher year-on-year, up from 1.8% in April. This was a key driver of the overall food inflation figure.
- Ambient Food Inflation Eases Slightly: Inflation for ambient food (shelf-stable products) fell to 3.3% from 3.6% in April, though it remains elevated.
- Overall Shop Prices Stable: In contrast, overall shop price deflation held steady at -0.1% year-on-year, the same as April. This indicates that while non-food items saw some price drops, rising food costs are offsetting these.
Helen Dickinson, Chief Executive of the BRC, highlighted that “Fresh foods were the main driver, and red meat eaters may have noticed their steak got a little more expensive as wholesale beef prices increased,” as reported by The Independent and Retail Gazette.
Factors Driving Food Price Increases
Several factors are contributing to the ongoing rise in food inflation, putting pressure on both consumers and retailers:
- Wholesale Meat Prices: Increased costs for wholesale meat, particularly beef, are directly impacting shelf prices for items like steak. Insights from the Agriculture and Horticulture Development Board (AHDB) often detail these market dynamics.
- Rising Retailer Costs: Retailers are grappling with significant cost increases, including an estimated £5 billion from higher employer National Insurance contributions and the National Living Wage increase that took effect in April 2025.
- Upcoming Cost Burdens: Further costs are on the horizon for retailers, such as an anticipated £2 billion from a new packaging tax and additional employment costs related to the implementation of the Employment Rights Bill.
- Global Factors: While not the primary driver in this specific report, global food prices and supply chain issues can also influence UK food inflation, as often tracked by the Office for National Statistics (ONS) in their broader inflation data.
Impact on Consumers and Retailer Warnings
The sustained rise in food prices poses an “extra challenge to consumer spending alongside rising household bills,” according to Mike Watkins, head of retailer and business insight at NielsenIQ. Retailers are warning that if statutory costs continue to climb, households may need to “brace themselves for more difficult times ahead as prices rise faster.”
While non-food items, particularly electricals, saw some price drops as retailers attempted to stimulate demand ahead of potential US tariff impacts, the relief in these areas is being counteracted by the increasing cost of essential food items.
Navigating Inflation: Finance Options for Businesses
For businesses in the food retail sector, agriculture, and the wider supply chain, managing inflationary pressures and rising operational costs is a key challenge. Strategic financial planning is essential. Information on government support and finance options can be a useful starting point. Working with a specialist finance broker provides access to a wide network of lenders and tailored solutions. With connections to over 95 lenders, brokers can help you navigate the market effectively.
Key finance solutions relevant to businesses impacted by food inflation include:
- Working Capital Loans: To manage increased costs of goods, energy, and labour, ensuring smooth day-to-day operations.
- Invoice Finance: To improve cash flow by accessing funds tied up in unpaid invoices from commercial customers.
- Business Loans (Unsecured and Secured): For investing in efficiency improvements, diversifying supply chains, or managing increased stock costs.
- Asset Finance: For acquiring new equipment that could lead to cost savings or improved productivity.
- Trade Finance: For businesses involved in importing or exporting food products, to manage the financial aspects of international trade.
Partnering with a finance broker simplifies finding and applying for the right funding. They understand the specific pressures faced by businesses in the current economic climate, can identify suitable options, and guide businesses through the process. For further impartial advice, explore resources from the British Business Bank and guides like the ICAEW Business Finance Guide.
Conclusion
The continued rise in UK food inflation in May 2025, driven by factors like wholesale meat prices and increasing operational costs for retailers, presents ongoing challenges for households and businesses. While overall shop price inflation remains subdued, the specific pressure on food budgets is a significant concern. Businesses in the food sector must employ astute financial management and explore available support to navigate this period of rising costs.
Is your business feeling the impact of rising food inflation and operational costs? Explore tailored finance solutions today and connect with our network of over 95 lenders to find the perfect fit for your needs.