Key facts
- Food inflation is forecast to peak at 6.4% in July 2027, according to the Food and Drink Federation.
- The FDF attributes rising food prices to increased energy, logistics, and packaging costs, exacerbated by the Iran war.
- Food prices have already risen nearly 40% since 2020.
- The FDF estimates that regulatory costs, including payroll taxes and advertising restrictions, added £2 billion to the industry last year.
- The FDF warns that continued regulatory uncertainty could deter investment and impact UK food security.
British food price inflation is projected to reach nearly 4% by the end of this year and could exceed 6% by July 2027, driven by factors including the impact of the U.S.-Iran war, drought in Europe, and the El Niño weather pattern, according to the Food and Drink Federation (FDF).
The FDF forecast that food and non-alcoholic drink prices would be 3.9% higher in December compared to the previous year, a significant decrease from its earlier projection of nearly 10%. However, the industry body warned that prices would continue to rise thereafter, potentially peaking at 6.4% in July 2027.
FDF Chief Executive Karen Betts stated that food and drink manufacturers have absorbed costs as much as possible but can no longer sustain persistently higher expenses for energy, logistics, and packaging, compounded by extreme summer heat. She added that sustained price increases are expected into 2027.
Data from the Office for National Statistics indicated that food and drink inflation fell to 1.3% in July, its lowest point since August 2024. The Bank of England views food and energy prices as key drivers of household inflation perceptions. The central bank forecasts food price inflation to reach 3.5% by December, with overall consumer price inflation at 3.1%.
Overall food and drink prices have increased by nearly 40% since 2020. The FDF has called on the government to reconsider plans restricting the marketing of unhealthy foods and noted that higher payroll taxes and stricter advertising and packaging rules added £2 billion in costs last year. The federation warned that continued regulatory uncertainty could lead manufacturers to defer investment, potentially jeopardizing UK food security.