The Food and Drink Federation (FDF) expects British food price inflation to approach 4% by the end of the year and to climb above 6% by mid-2027, according to a fresh projection from the trade body. The group attributed the anticipated increases to a combination of the ongoing U.S.-Iran war, drought conditions in Europe and the El Niño weather pattern.
Projected trajectory
The FDF's forecast puts food and non-alcoholic drink prices 3.9% higher in December versus the same month a year earlier. That estimate represents a marked downshift from an earlier FDF projection that had suggested inflation nearing 10%.
Looking beyond the year-end, the federation said inflation will continue to rise and reach a peak of 6.4% in July 2027. It expects price pressure to remain elevated through the second half of 2027, characterizing the period as one with a lower peak but a longer plateau compared with its April outlook.
Industry pressure points
Karen Betts, Chief Executive of the FDF, said manufacturers worked to hold prices down during the energy shock that followed the closure of the Strait of Hormuz, but she cautioned that this approach is unsustainable indefinitely. She cited persistently higher costs for energy, logistics and packaging, together with extreme summer heat, as factors set to push food prices higher this year and sustain increases into 2027.
The trade body also noted that total food and drink prices have risen nearly 40% since 2020.
Official data and central bank views
Office for National Statistics figures show a recent easing in headline food inflation: food and drink inflation fell to 1.3% in July, the lowest reading since August 2024. By contrast, overall consumer price inflation rose to 2.9% in July.
The Bank of England has highlighted the outsized influence of food and energy costs on household perceptions of inflation. In its projections, the central bank expects food price inflation to reach 3.5% by December while predicting the consumer price index will be 3.1% in the same month.
Policy and cost burdens
The FDF urged the government to pause planned restrictions on marketing for foods classified as unhealthy, arguing that recent regulatory and tax changes have added material cost burdens. The federation estimated that higher payroll taxes and tighter advertising and packaging rules combined to add around 2 billion (about $2.7 billion) in costs last year, according to the federation.
Note on available information: The FDF's projections and its estimate of the cost impact from policy changes are presented as reported by the federation.