UK food inflation ‘could hit 9%’, trade body warns as Reeves meets retail chiefs
Discussion on how to ease impact from Iran war coincides with Food and Drink Federation almost tripling forecastFood inflation could hit 9% in the UK this year even if the strait o
By The Guardian
The UK food industry is bracing for a dramatic surge in prices, with the Food and Drink Federation warning that food inflation could reach at least 9% by the end of 2026, nearly tripling its previous forecast of around 3%. The stark revision comes as escalating conflict in the Middle East, particularly around Iran, has disrupted critical energy supplies and pushed up costs across the entire supply chain.
The FDF's updated forecast represents a significant shift in expectations for British households and businesses alike. Just weeks ago, the trade body had anticipated a gradual easing of food inflation throughout 2026, predicting it would settle at approximately 3% by year's end.
However, the effective closure of the Strait of Hormuz and damage to oil and gas facilities in the region have forced a complete reassessment of the economic outlook for food and drink manufacturers. The timing of this warning is particularly significant, coinciding with discussions between Chancellor Rachel Reeves and retail chiefs about how to mitigate the impact of rising costs on consumers and businesses.
The government faces mounting pressure to provide support as the food and drink sector grapples with multiple simultaneous pressures that threaten to reshape the retail landscape. Dr Liliana Danila, chief economist at the FDF, outlined the severity of the challenge facing manufacturers.
"The food and drink sector is already feeling the force of this geopolitical shock," she said. "As one of the UK's energy intensive industries, manufacturers are facing mounting energy bills, rising transport and packaging costs and disruption across key supply chains.
These pressures are hitting simultaneously, and are a significant challenge for businesses to absorb."
The food and drink industry's vulnerability to energy price shocks reflects its fundamental dependence on reliable, affordable power. Food manufacturing, processing, refrigeration, and distribution all require substantial energy inputs, making the sector particularly exposed to volatility in global energy markets.
With the Middle East conflict driving up oil and gas prices, these costs are being transmitted directly through to consumers at the supermarket till. This is not the first time geopolitical conflict has sent shockwaves through food prices.
When Russia invaded Ukraine in 2022, it triggered a fossil fuel crisis that contributed to sharp rises in food costs. Research shows that across 2022 and 2023, UK households ended up paying around £600 more for food as a result of those combined energy and supply chain pressures.
Despite some moderation since then, wages have not kept pace with the cumulative price increases, leaving many families struggling with affordability. The FDF is now calling on the government to take concrete action to support the sector.
The trade body is asking for food and drink manufacturers to be included in the British Industrial Competitiveness Scheme, which currently offers support with industrial electricity bills. However, the sector is not currently eligible because it is not classified as "Advanced Manufacturing." This exclusion means food producers are bearing the full brunt of rising energy costs without access to the same support mechanisms available to other energy-intensive industries.
Beyond immediate energy support, the FDF is also requesting that updates to the Nutrient Profiling Model be delayed and that "outdated" regulations be scrapped to help ease pressure on the sector. The trade body argues that manufacturers have already absorbed significant costs from recent regulatory changes, including the Extended Producer Responsibility scheme and the Deposit Return Scheme, and cannot absorb additional burdens simultaneously.
The broader context of climate and conflict risks adds another layer of concern for food security and affordability. Energy and Climate Intelligence Unit analyst Chris Jaccarini warned that "when Russia's invasion of Ukraine triggered a fossil fuel crisis, it helped drive a sharp rise in food prices." He noted that scientists are warning El Niño could return sooner than expected and intensify the extreme heat that climate change is already driving around the world, potentially jeopardising food production further.
The implications of a 9% food inflation rate would be substantial for British consumers. For a typical household spending around £100 per week on groceries, this would translate to approximately £9 extra per week, or roughly £468 per year.
For families already struggling with the cost of living, such increases could force difficult choices between food, heating, and other essentials. The situation also raises questions about the resilience of global supply chains and the UK's food security strategy.
The dependence on energy-intensive processes and international trade routes means that regional conflicts thousands of miles away can have immediate impacts on British dinner tables. As geopolitical tensions remain elevated, the food industry faces an uncertain outlook for the remainder of 2026 and beyond.
The FDF's revised forecast serves as a warning to policymakers that decisive action may be needed to prevent a repeat of the hardship experienced during the Ukraine crisis. Without government support and regulatory relief, manufacturers may have little choice but to pass costs on to consumers, potentially triggering another significant squeeze on household budgets at a time when many families are already financially stretched.