Shop price inflation in the United Kingdom is beginning to accelerate after a period during which retailers managed to suppress price increases through heavy discounting, according to recent data from the British Retail Consortium (BRC). Shop prices rose by 2.1% in the year to October 2026, up from 1.4% in September and exceeding the three-month average of 1.6%.

Retailers have attributed this rise partly to the ongoing economic ripple effects stemming from the conflict involving Iran, which has driven up energy and supply costs internationally. Higher prices for long-life goods are a significant factor behind the inflationary surge. Meanwhile, fresh food inflation remained stable at 2.6%, and overall food prices increased by 2.9% compared with 2.5% in the previous month.

Industry experts had warned earlier in the year that geopolitical tensions, particularly following initial US and Israeli military actions against Iran in February, could disrupt trade routes such as the Strait of Hormuz and lead to substantial food price increases in the UK. The Food and Drink Federation initially forecasted that food inflation might climb as high as 10% by the end of 2026 but later revised this peak down to 6.4% by mid-2027. In recent months, however, food inflation has steadied at around 1.3%, prompting supermarket executives, including those at Sainsbury’s and Tesco, to question how much of the cost pressures will ultimately be reflected in consumer prices.

Mike Watkins, head of retailer insight at analytics firm NIQ, noted retailers had so far mitigated some of the inflationary impact through aggressive promotional activity. “High street retailers, faced with consumers becoming more cautious in the face of higher energy and fuel costs, will now be more reliant on promotions to drive discretionary non-food spend,” Watkins said.

Helen Dickinson, chief executive of the BRC, warned that the period during which retailers absorbed cost increases without full price pass-through was ending. “The dam is starting to break on the huge wave of costs retailers have absorbed over the last two years,” she said. Dickinson urged Chancellor John Healey to intervene promptly to prevent further inflationary pressure, emphasizing that the recent jump in prices might only be the beginning without policy changes.

The BRC recommended a set of measures to curb rising food costs, including cancelling planned increases in business rates, reducing employment costs, and removing taxes related to packaging. These steps, the trade body argued, could help shield consumers from further price rises as retailers face mounting cost challenges.