Overview

• Food inflation in the UK increased to 2.4% in March 2025, up from 2.1% in February, driven by global sugar prices and duty changes on beverages.
• Overall shop prices fell by 0.4% year-on-year in March, a smaller decline compared to February's 0.7% drop, as non-food categories like clothing saw double-digit deflation.
• Retailers are preparing for significant cost increases starting in April, including higher employer social security contributions and new packaging taxes, which are expected to accelerate inflation.
• Fresh food prices rose by 1.4% in March, a slight dip from February's 1.5%, while ambient food inflation jumped to 3.7% from 2.8%.
• The Bank of England is monitoring the potential inflationary impact of rising business costs, with retailers using seasonal promotions and targeted price cuts to sustain consumer demand.