The UK’s inflation rate accelerated unexpectedly in July as food and drink prices rose for the fourth consecutive month.
The overall inflation rate hit 3.8% compared with last year, ahead of economists’ expectations of 3.7% and up from 3.6% in June.
This was partly driven by food and drink prices, which rose by 4.2%, their fastest rate since February 2024. It means grocery prices are now up 1.9 percentage points in just four months.
ONS chief economist Grant Fitzner said items such as coffee, fresh orange juice, meat and chocolate saw the biggest rises last month.
The UK sources much of its fresh fruit and vegetables from southern Europe, where ongoing droughts have pushed up prices this summer.
There was some relief for shoppers as clothing and footwear inflation remained stable, while prices of foods like olive oil, butter and cheese all fell.
Yet cocoa prices still remain at a 45-year high, while both olive oil and butter prices have doubled since 2020. “Food and drink manufacturers are being squeezed on all sides,” said Jim Bligh, director of corporate affairs and packaging at the Food & Drink Federation.
“Manufacturers have absorbed as many of these costs as possible, but consumers will still see higher prices at the till. We expect that high food and drink inflation will persist through the year.”
Kris Hamer, director of insight at the British Retail Consortium, said government policies had fuelled inflation by driving up the cost of employment, ”while poor harvests and global instability have also added further cost pressures”.
A jump in air fares was behind much of the larger-than-expected rise in inflation. Flights out of the UK rose 30% month on month, though much of this was due to summer holidays.
The average price of petrol rose by 2 pence per litre from June to July 2025, compared with last year when they were falling.
Chancellor Rachel Reeves said: “We have taken the decisions needed to stabilise the public finances, and we’re a long way from the double-digit inflation we saw under the previous government, but there’s more to do to ease the cost of living.
“That’s why we’ve raised the minimum wage, extended the £3 bus fare cap, expanded free school meals to over half a million more children, and are rolling out free breakfast clubs for every child in the country.”
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