Food Inflation Falls — But Fresh Produce Pays the Bill

Food inflation fell to 2.4% in June, down from 2.7% in May, according to the latest BRC-NIQ Shop Price Index — with fresh food leading the decline, easing to 2.8% from 3.4% the month before. Both figures now sit below their three-month averages, and the headline direction of travel will be welcome news for households after a bruising few years at the tills.

Kantar's latest grocery market data tells a similar story, with grocery price inflation easing back to 1.7% over the past four weeks. Yet the same research reveals a telling disconnect: consumer confidence has not recovered alongside the numbers, with nearly six in ten shoppers still very or extremely concerned about rising grocery prices. The memory of double-digit food inflation, it seems, will take far longer to fade than the inflation itself.

A calm built on margin, not falling costs

Look beneath the headline figures, however, and the picture is considerably less comfortable. The British Retail Consortium attributes the fall in food inflation to intense competition among supermarkets — price reductions and elevated promotional activity holding shelf prices down through the summer trading period.

What the data does not show is any meaningful easing in the costs flowing into the supply chain.

Quite the opposite. The BRC itself warns that retailers face mounting cost pressures, citing higher National Insurance contributions, new packaging taxation and rising input costs driven by extreme weather and geopolitical tensions. The Food and Drink Federation, meanwhile, has revised its year-end food inflation forecast from around 3% to over 9%, reflecting the energy and freight shocks flowing from the closure of the Strait of Hormuz. NIQ's analysis notes that current shelf prices are being supported by promotions — a strategy with a finite lifespan.

In other words, today's easing inflation is not the product of a supply chain under less pressure. It is the product of margin being sacrificed somewhere — and history tells us that "somewhere" is rarely the retailer alone.

The view from the supply chain

For fresh produce businesses, this is the crux of the matter. Growers, importers and wholesalers are absorbing rising energy, labour, logistics and compliance costs at precisely the moment retail pricing is being held down to reassure anxious consumers. That equation cannot balance indefinitely, and the sector has seen before what happens when it fails: reduced plantings, business closures and, ultimately, less choice and higher prices for the very consumers the current discounting is designed to protect.

The Fresh Produce Consortium has consistently argued that Government must address the cost burden it controls — from employment taxation to regulatory friction at the border — rather than allowing the supply chain to carry the strain. With further import-related costs on the horizon under the proposed UK–EU SPS arrangements, that argument has never been more urgent. Falling food inflation is a welcome headline. Ensuring it is sustainable is the harder task, and it starts with recognising who is currently paying for it.

Sources: BRC-NIQ Shop Price Index, June 2026 (published 30 June 2026); Kantar Grocery Market Share update; Food and Drink Federation food inflation forecast, 2026.