Food Prices To Continue Rising While Baskets Shrink And Shoppers Prioritise Value

Morrisons’ chief executive Rami Baitiéh has warned that food prices are likely to remain on an upward curve in 2026 and that customers are already responding by buying smaller baskets of groceries. 

Baitiéh is reported as saying food inflation will “go up and up over the coming months”, even as Morrisons cuts prices on 2,500 key items to try to retain shoppers and protect market share. 

Consumers are “feeling a squeeze”, Baitiéh explained, resulting in them trading down and tightening spending. 

Baitiéh’s comments come as the latest ONS figures this week show food inflation rose by 4.5% in the 12 months to December 2025, up from 4.2% in the 12 months to November, driven by higher vegetable and cereals prices. 

James Walton, chief economist at IGD, agreed that food inflation will persist “for some time”, reports Talking Retail.

“This is because the food and drink industry is under significant supply chain pressure due to global supply shortfalls and difficult operating environment,” Walton said. 

“Long-term, the real “fix” for food inflation is to maximise production, especially here in the UK, bringing supply into closer line with demand,” suggested Walton.

Savvy Shoppers Seek Value 

As the cost of living continues to pinch, grocery shoppers are being increasingly “savvy”, according to a recent report by Ocado.

Around 70% of the 2,009 consumers surveyed by Ocado said they prioritise value while still expecting good quality and taste. 

The sentiment is driving a “high-low” shopping trend where people splurge on a few premium items and save on basics – an approach followed by almost two thirds (63%) of UK shoppers. 

Ocado frames this behaviour as a key pattern for January 2026 that will continue throughout the year. 

Although consumers are under pressure, the retailer said they still want inspiration and convenience, meaning they look for retailers that offer both high‑quality hero ingredients and competitively priced everyday products in one place. 

Ocado also pointed out that many shoppers feel a single “hero” ingredient can make a meal feel restaurant‑standard, reinforcing the appeal of selectively trading up while keeping the rest of the basket tightly budgeted. 

Dan Elton, Chief Customer Officer at Ocado Retail, said although January has always been a prime time for savvier consumer spending, shoppers are unwilling to make a trade off between quality and convenience.

“Customers want to know they can find everything they need in one place, without having to shop around,” Elton noted. “That’s why at Ocado, we make it easy to combine premium ingredients with great-value everyday staples, all while offering recipe inspiration that shows value-led cooking doesn’t have to be boring.”