Food prices have jumped faster than the already bloated inflation rate, causing the cost of cupboard staples such as cereal and milk to soar, according to official figures.
Latest data released by the Office of National Statistics (ONS) revealed that food prices have risen by 4.4 per cent over the last year, the highest figure since February 2024.
This puts food inflation comfortably above the current inflation level of 3.4 per cent, which is significantly higher than the Bank of England’s target of 2 per cent.
Leading economists have warned that shoppers are now feeling the brunt of Rachel Reeves’ hikes to National Insurance Contributions (NICs) and minimum wage on businesses which were introduced in April.
The Chancellor revealed during her October Budget that she would increase the National Living Wage by 6.7 per cent and increase NICs from 13.8 per cent to 15 per cent.
She confirmed the move in her Spring Statement, adding that three million people would see their pay rise from £11.44 to £12.21 an hour. The National Minimum Wage for those aged 18 to 20 also received a 16.3 per cent bump up.
Havir Dhillon, economist at the British Retail Consortium, told that the huge increases in costs to shoppers was as a result of Ms Reeves’ hikes – and that it could get worse before it gets better.
A new graphic has laid bare the individual items which have risen the most – revealing that butter, chocolate and beef have all jumped by more than 17 per cent over the last year.
Mr Dhillon said: ‘Retailers are grappling with an additional £5bn in costs from April’s increased Employer National Insurance contributions and National Living Wage.
‘The result is that food inflation has been trending upwards over recent months, expected to hit 5 per cent by the end of this year.
‘Retailers are doing all they can to keep prices low to help their customers, but their capacity to continue doing so is limited.
‘Government must ensure retailers aren’t hit with further policy-induced costs, helping retailer efforts to limit inflation for essential items.’
The graphic shows that butter, topping the charts, has drastically increased by 18.2 per cent.
But this is closely followed by chocolate at 17.7 per cent and beef at 17 per cent, while coffee at 13.9 per cent and lamb at 11.2 per cent have both shot up.
Those beneath the 10 per cent mark are ice cream at 7.6 per cent, whole milk at 5.9 per cent, cereal at 4.8 per cent, chicken at 4.4 per cent and fish at 2.8 per cent.
Head of Retail and Consumer Insight at Kantar, Fraser McKevitt, told BBC News this morning that shoppers may have to reconsider where they shop in order to save money.
He said: ‘Grocery price inflation really matters because the average British household is spending more than £5000 per year in supermarkets, so even a small increase in inflation hit people in the wallet.
‘The slightly good news is that we can’t do much about fuel or energy prices, but there is room for shoppers to make some choices about what they buy and where they shop.
‘They can’t get away from price rises completely, but they might be able to cut some of the effects.’
Ms Reeves had hoped for overall inflation to decrease after analysts had predicted a slight fall to 3.3 per cent last month.
But official figures showed headline CPI stuck at 3.4 per cent.
It was the rising food prices that offset easing air fares and transport costs, dashing hopes that Brits would get some respite after ‘Awful April’ bill hikes pushed prices up at their highest pace for a year.
The Chancellor admitted there was ‘more to do’ to tackle the cost of living, insisting her ‘number one mission is to put more money in the pockets of working people’.
She said: ‘We took the necessary choices to stabilise the public finances and get inflation under control after the double digit increases we saw under the previous government, but we know there’s more to do.
‘Last week we extended the £3 bus fare cap, funded free school meals for over half a million more children and are delivering our plans for free breakfast clubs for every child in the country.
‘This Government is investing in Britain’s renewal to make working people better off.’
Shadow Chancellor Sir Mel Stride said the failure to decrease inflation was ‘deeply worrying’.
He said: ‘This morning’s news that inflation remains well above the 2 per cent target is deeply worrying for families.
‘Labour’s choices to tax jobs and ramp up borrowing are killing growth and stoking inflation – making everyday essentials more expensive.’
ONS acting chief economist Richard Heys said: ‘A variety of counteracting price movements meant inflation was little changed in May.
‘Air fares fell this month, compared with a large rise at the same time last year, as the timing of Easter and school holidays affected pricing. Meanwhile, motor fuel costs also saw a drop.
‘These were partially offset by rising food prices, particularly items such as chocolates and meat products. The cost of furniture and household goods, including fridge freezers and vacuum cleaners, also increased.’
In a small bright spot, core CPI inflation – excluding energy, food, alcohol and tobacco – was going up by 3.5 per cent in the 12 months to May, lower than the 3.8 per cent the previous month.
The annual CPI goods rate rose from 1.7 per cent to 2 per cent, while services slowed from 5.4 per cent to 4.7 per cent.
The figures mean prices were still rising in May at a similar rate to April when a raft of bills increased for households up and down the country.
The energy price cap, set by regulator Ofgem, rose by 6.4 per cent in April, resulting in bills for a typical household rising by £9.25 a month.
Steep increases to water charges, and rises for council tax, mobile and broadband tariffs , and TV licences were among those to take effect.
Meanwhile, oil prices have been rising since Israel launched an attack on Iran’s nuclear programme, raising concerns that the supply of crude from the Middle East could be disrupted.
Rising oil prices could threaten to push up inflation in the UK.
Energy costs coming down has been one of the biggest contributors to overall inflation falling from the peaks hit during the cost-of-living crisis.