UK Food Inflation Rises to 2.4% as Retailers Brace for New Cost Pressures

Supermarkets increase promotions to attract shoppers, but upcoming tax hikes and wage increases are expected to push inflation higher in the coming months.

• Food inflation in the UK climbed to 2.4% year-on-year in March 2025, up from 2.1% in February, driven by higher prices for ambient food and beverages.
• Overall shop prices fell by 0.4% compared to last year, though the rate of decline slowed from February's 0.7% drop, with non-food categories like clothing and footwear experiencing deflation.
• Retailers face £7 billion in additional costs from tax increases and wage hikes starting in April, which are expected to intensify inflationary pressures in the coming months.
• Supermarket promotions reached a four-year high, with discounted goods accounting for 28.2% of grocery sales as retailers compete to attract cost-conscious consumers.
• The Bank of England warns inflation could rise to 3.75% later in 2025, complicating efforts to lower interest rates as households rank rising grocery costs among their top financial concerns.

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