Food costs have seen the biggest increases

Store prices in the UK have jumped 5.1% year-on-year in August from 4.4% in July, posting their highest growth rate since 2005, Sky News reported on Wednesday, citing data from the British Retail Consortium (BRC) and research company NielsenIQ.

According to the report, food prices surged at their fastest rate since 2008 – to 9.3% from last year. Fresh food prices were 10.5% higher than last August, up from the 8% rise recorded in July, with products such as milk and margarine seeing the biggest price increases.

According to the UK Office for National Statistics (ONS), the rise in food prices is one of the key drivers of inflation, which surged to 10.1% in July. Some analysts warn it could exceed 18% or even 22% next year, if energy prices continue growing.

According to BRC chief executive Helen Dickinson, the outlook is “bleak for both consumers and retailers.” She noted that businesses are likely to support customers through “discounts to vulnerable groups, expanding value ranges, fixing prices of essentials, and raising staff pay,” but said that “there is only so much they can shoulder” amid soaring costs.

READ MORE: UK credit card borrowing soars – Guardian

Mike Watkins, head of retailer and business insight for NielsenIQ, suggested that “this level of food inflation to be with us for at least another six months.”

“With further falls in disposable incomes coming this autumn as energy costs rocket again, retail spending will come under pressure in the all-important final quarter of the year.”

For more stories on economy & finance visit RT's business section