London: UK food price inflation is expected to rise to nearly 4 percent by the end of this year and could exceed 6 percent by mid-2027, as higher energy and logistics costs combine with extreme weather and wider supply pressures, an industry body said on September 9.
The Food and Drink Federation forecast that prices for food and non-alcoholic drinks would be 3.9 percent higher in December than a year earlier. That is a sharp reduction from the federation’s previous forecast of nearly 10 percent, but the group expects food inflation to continue rising after the end of this year and reach a peak of 6.4 percent in July 2027.
Food and Drink Federation Chief Executive Karen Betts said manufacturers had worked to keep prices as low as possible during the energy shock linked to disruption around the Strait of Hormuz, but warned that businesses could not absorb higher costs indefinitely.
“Persistently higher costs of energy, logistics and packaging, compounded by this summer’s extreme heat, mean that food prices will rise this year,” Betts said, adding that the increase was expected to continue into 2027.
The latest forecast suggests food inflation could remain significantly above historical averages during the second half of 2027. The federation said the expected peak would be lower than previously forecast but could last for longer.
Official data showed that food and drink inflation slowed to 1.3 percent in July, its lowest level since August 2024. Overall consumer price inflation, however, rose to 2.9 percent in July, keeping pressure on households and policymakers.
The Bank of England has said food and energy prices have a particularly strong influence on how households perceive inflation compared with many other categories of goods and services. The central bank expects food price inflation to reach 3.5 percent by December, while overall consumer price inflation is forecast at 3.1 percent.
Despite the recent slowdown in food inflation, prices remain substantially higher than before the surge in living costs. The Food and Drink Federation said overall food and drink prices had increased by nearly 40 percent since 2020.
The industry body said extreme summer heat and drought conditions in Europe were adding to pressure on agricultural production and food supply chains. The El Niño weather pattern could also contribute to higher costs by affecting global weather conditions and commodity supplies.
Manufacturers are also facing higher expenses for energy, transport and packaging. The Food and Drink Federation said tighter advertising and packaging rules, along with higher payroll taxes, had added around £2 billion in costs for businesses last year.
The new forecast comes as British households continue to face concerns over the cost of essentials. Although food inflation has fallen sharply from the highs seen during the earlier cost-of-living crisis, the prospect of renewed price increases could place additional pressure on household budgets.
The industry expects food inflation to remain elevated well into 2027, reflecting the combined effects of energy costs, supply-chain expenses, extreme weather and regulatory pressures facing Britain’s food and drink sector.
MOST READ | Macron pushes EU ban on social media access for under-15s
