Food Price Pressure To Persist As Industry Sounds Alarm

UK food prices are expected to remain under significant pressure through 2027, as the Food and Drink Federation (FDF) warns that the cost of a weekly supermarket shop could reach nearly £150 by next summer.

A combination of high energy costs, extreme weather, and rising regulatory costs are prolonging the difficult outlook with fruit and vegetable prices already experiencing some of the biggest cost increases this year, reports The Telegraph.

The FDF forecasts that food inflation will approach 4% by Christmas before peaking at 6.4% next July, which would be almost five times the 1.3% annual rate recorded in July 2026.

While the projected peak is below the 9-10% level previously anticipated when the Iran conflict began, the FDF said food and non-alcoholic drink inflation is likely to remain elevated rather than falling quickly as it has during previous periods of disruption. 

The trade organisation expects food price inflation to remain above 5% until at least the end of next year. 

As such, it estimates that a weekly supermarket shop costing £100 in 2020 would approach £150 by next summer. 

Already, FDF said food prices have risen by nearly 40% since 2020.

Food Supply Chain Under Pressure

The FDF attributed the outlook to a combination of higher energy and logistics costs, extreme summer weather, and additional costs imposed on the food sector through government policy.

Food and drink manufacturers cannot keep prices down indefinitely, warned Karen Betts, the FDF chief executive.

“The persistently higher costs of energy, logistics and packing, compounded by this summer’s extreme heat, means that prices will rise this year, and we believe that rise will be sustained into 2027,” she explained.

The summer’s prolonged heatwaves and drought have added another layer of pressure, meanwhile, after crop yields were badly affected across cereals and fresh produce.

Already, the fresh fruit and vegetable category has experienced some of the sharpest price increases so far this year, highlighting the industry’s particular exposure to extreme weather. 

In the year to August, iceberg lettuce prices almost doubled, while tomatoes increased by 77%, beans by 56%, and cucumbers by 40%, according to figures from Defra.

Other produce items also saw increases including: turnips, blackberries, cauliflower, peas, spring greens, courgette, cabbage, and rhubarb.

For UK-grown fruit and vegetables as a whole, prices increased by an average of 8% during the 12 months to August.

Warning Bells Over National Food Security

Energy represents 8% of the cost of producing food in the UK, and gas prices have more than doubled since the start of the conflict in Iran, according to the FDF. 

Electricity prices have risen at a similar rate, plus the cost of diesel has increased by 30%.

The FDF also said five new policy measures added £2bn to sector costs last year, including higher employers’ National Insurance contributions and the plastic packaging tax. 

FDF’s Betts has called on the Prime Minister to support food suppliers facing higher energy bills.

She also warned that the current difficult business climate is affecting investment decisions too.

“In the end a lack of processing and manufacturing capability in the UK will undermine our food security,” she pointed out. 

“By taking action, government can take the heat out of food inflation, help keep a lid on the cost of the weekly shop, and signal to hard-pressed food manufacturers that they take food security seriously.” Betts added.

The National Farmers Union (NFU) has separately warned that the UK is becoming less self-sufficient in 10 of 11 everyday food categories, including beef, poultry, and eggs. 

Food imports into the UK, meanwhile, have increased by 70% over the past 30 years, according to the organisation.

“Our report today paints a stark picture of falling production and an increasing reliance on imported food while at the same time the world is becoming more unstable,” warned Tom Bradshaw, NFU president.

“We can’t rely on the rest of the world to feed us,” he added.

Repeated Disruption Becoming The Norm

Food inflation will average 5.5% in 2027, forecasts FDF.

Since food and non-alcoholic drinks account for almost 11% of the basket used to calculate the Consumer Prices Index, the trade body estimates that higher food prices will add 0.6 percentage points to CPI inflation.

That could make it more difficult for the Bank of England to reduce interest rates, increasing the pressure on household finances.

The FDF’s longer-term forecast puts average food inflation at between 1.5% and 2%, although it warned that repeated disruption was increasingly becoming the norm.

For the UK fresh produce industry, the combination of weather-related supply constraints at home and abroad, higher energy and logistics costs, coupled with increased policy costs points to continued volatility well into 2027. 

Read the FDF’s Food Inflation Forecast here.