Grocery inflation ticks up again - as energy costs weigh on shoppers

A closely-watched measure of grocery inflation has ticked up for a second consecutive month amid fears of an energy-led surge ahead.

Worldpanel by Numerator, which tracks prices and sales data at major supermarket chains, said the pace of price increases across ranges accelerated to an annual rate of 2.5% over the four weeks to 4 October.

It has been on the increase since August, despite high levels of promotional activity at the tills.

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Worldpanel said prices were rising fastest in markets such as water and squash, skincare and skin cleansing. They were falling fastest in butters and spreads, chocolate and cheese.

Its report highlighted a shift in shopping habits driven by rising energy costs and uncertainty over what lies ahead.

Fraser McKevitt, head of retail and consumer insight at Worldpanel by Numerator, said: "With the autumn budget fast approaching, the cost of living continues to weigh heavily on the minds of shoppers.

"And the cost of filling up a car is only adding to the pressure on household budgets. More than half tell us they're very or extremely worried about petrol prices, and almost one in three say it's already taking a real toll on their finances.

"Until the chancellor sets out his plans, we expect that caution to carry on showing up at the till, with shoppers leaning more heavily on promotions to keep their grocery spend under control."

Worldpanel said that spending on promotions over the last month was up by more than £250m - a clear signal that shoppers are increasingly seeking value.

Over the reporting period, UK diesel prices were nearing a record £2 a litre and the energy price cap had just risen by 4%.

The Worldpanel data was revealed shortly after the wider retail industry reported "sluggish" growth during September.

Helen Dickinson, chief executive of the British Retail Consortium, demanded direct support from John Healey to help keep consumer bills down as surging energy prices add to the sector's costs.

"The chancellor cannot promise to ease the cost of living while piling more costs onto the retailers working to keep prices down," she argued.

"With confidence fragile, this budget is a critical test. Retailers will do everything they can to protect value for customers, but government must play its part."

She added: "This budget must back retail to invest, employ and grow, not make it harder."

Mr Healey has avoided, unlike his predecessor, fuelling pre-budget speculation but is widely tipped to reveal energy support for the worse off as price pressures intensify heading into winter.

The Bank of England is now widely expected to impose a 0.25 percentage point interest rate increase early next month, taking Bank rate to 4%, amid fears energy-driven inflation will become more widely baked in - to things like food prices - ahead.

Transport operators are already understood to be passing on higher fuel costs. The UK's van and HGV delivery fleet is powered almost exclusively by diesel.

The big question now is the extent to which supermarket chains pass on higher fuel and production costs to customers at the checkout.

Any significant move before Christmas is unlikely due to surging promotional activity that is usually seen ahead of the key festive earnings season.

The Bank is set to act in the wake of new inflation data which is tipped to show a leap during the month of September to an annual rate around 3.5%. It stood at 3.1% in August.

Economists at Pantheon Macroeconomics expected upward pressure to mainly come from motor fuel prices again, but also the reversal of summer VAT cuts on attractions introduced by former chancellor Rachel Reeves.

October's figures will reflect not only where fuel prices are this month, but also the 4% lift to household energy bills through the latest price cap shift.

Experts are currently predicting a rise of at least 16% for the energy price cap from January and a growing influence on food prices beyond manufacturing power costs as the impact of poor harvests - from hot weather and the influence of a super El Nino event - becomes clearer.

(c) Sky News 2026: Grocery inflation ticks up again - as energy costs weigh on shoppers