Countdown To Crunch Time: IGD Flags 2026 As Pivotal For UK Food Sector

The IGD (Institute of Grocery Distribution) has issued a stark warning to the UK’s food and drink sector: 2026 could prove to be a make-or-break year. The message? Firms must gird themselves for a volatile landscape where affordability and selective indulgence will set the pace.

According to IGD’s freshly released Economic Viewpoint report, What to Plan for in 2026, persistent retail food inflation, fragile shopper confidence, rising household taxes, and global economic headwinds will converge to create widespread pressure on food and drink businesses.

The forecast for retail food inflation shows only a modest easing: from 4.3% in 2025, to 3.8% in 2026, then 3.3% by 2027. But IGD cautions that geopolitical shocks — still a looming possibility — could trigger fresh price spikes, derailing any hope of relief.

Meanwhile, the report predicts consumer behaviour will shift decisively. Some 33% of shoppers say they plan to cut back on grocery spend in 2026 — up from 28% in December 2024. In the away-from-home sector, approximately 45% of consumers expect to reduce spending in the months ahead.

“This will be a critical year for the food and drink industry,” said James Walton, Chief Economist at IGD. Business success, he argues, will hinge on staying relevant for value-conscious consumers while also capturing growth in resilient, opportunity-rich segments. “Those able to deliver affordability alongside moments of indulgence will be best placed to succeed.”

Yet, for businesses willing to adapt, the challenges also bring opportunities. The report identifies pockets of growth — particularly around seasonal events and occasions when consumers are willing to trade up. For producers and retailers that can strike the right balance between value and premium offerings, there may still be growth potential.

Lastly, IGD flags the political and regulatory backdrop. With the UK halfway through the current Parliament, and likely further policy shifts on the horizon ahead of the next General Election, food businesses may face new regulations, fiscal pressures or supply-chain implications. According to IGD, readiness for regulatory change could be just as important as price competitiveness.

Overall, the verdict from IGD is clear: 2026 is no longer just another year — it is shaping up to be a defining moment for which businesses in the UK food and drink sector adapt, endure or fall behind.