UK Shop Prices Soar Amid Energy Costs and AI-Driven Chip Shortage

UK shop prices have risen at their fastest pace in over two years, driven by high energy costs and increased demand for memory chips due to the artificial intelligence boom. According to the British Retail Consortium-NIQ shop price index, shop prices rose 1.5% in August compared to a year earlier, up from 0.9% in July.

The acceleration comes as broader inflationary pressures re-emerge across the UK economy. Consumer price inflation reached 2.9% in July, a four-month high, and is expected to climb further through the remainder of the year. The Bank of England projects CPI will peak at 3.2% in October and November.

Food costs were a primary driver of the increase. Food price inflation climbed to 2.8% year on year in August, up from 2.2% in July. Non-food inflation also moved sharply higher, rising to 0.9% in August from 0.2% in July.