UK retail body warns 'dam is starting to break' on price rises

LONDON, Oct 27 (Reuters) - Britain's main retail trade body warned on Tuesday that shops are now increasingly unable to absorb the impact of rising costs, after its data showed prices increased at the fastest pace in two-and-a-half years this month.

The British Retail Consortium said shop prices in October were 2.1% higher than a year ago, the biggest increase since February 2024 and up from a 1.4% annual increase in September.

"The dam is starting to break on the huge wave of costs retailers have absorbed over the last two years," BRC Chief Executive Helen Dickinson said, calling on finance minister John Healey to lower retailers' property taxes and employment costs in his first annual budget on Wednesday.

• Official consumer price inflation, which covers a wider range of goods and services, rose to an 11-month high of 3.5% in September from 3.1% in August

• BRC food price inflation was 2.9% in October, its highest since April and up from 2.5% in September

• Ambient food price inflation rose to its highest since September 2025 at 3.2%, up from 2.2% in September

• Fresh food inflation was unchanged at 2.6%

• Non-food inflation rose to 1.7% from 0.8%, its highest since December 2023, with particularly sharp rises for furniture, flooring and home improvement goods

• The BRC said prices were being pushed up by higher transport and energy costs, as well as increases in employment costs and packaging levies

• Bank of England Governor Andrew Bailey said this month that businesses had so far largely absorbed higher energy costs caused by the US-Iran war, unlike after Russia's invasion of Ukraine in 2022, reducing the need to raise interest rates

• Food price inflation has been slower to pick up than first predicted, with the Food and Drink Federation trade body now expecting it to peak next year

• BRC data is based on prices collected from October 1-7

(Reporting by David Milliken, editing by Andy Bruce)