Soaring Food Prices Could Add £150 To Shopping Bills

Prolonged conflict in the Middle East could cause UK food inflation to more than double to 8% by June, piling further costs onto households already stretched by rising living expenses, warns IGD.

The new forecast of surging food prices by summer is a worst-case scenario if disruption to global energy markets continues, the Institute of Grocery Distribution (IGD) said. 

According to IGD’s latest projections, food inflation, now at 3.6%, could “briefly reach over 8% by June 2026” under its most severe but short‑lived energy shock scenario for businesses. 

Food production and supply is a highly energy‑intensive industry, which has left the sector particularly vulnerable to sudden swings in oil and gas prices and their knock-on impact on fuel and fertiliser costs.

IGD’s warning comes on top of a prolonged squeeze on UK shoppers following several years of rising food and drink prices.

Already, current retail food prices in the UK are around 38% higher than before the Covid pandemic, driven largely by the surge in energy costs following Russia’s invasion of Ukraine. 

IGD’s latest modelling forecasts three scenarios for this year. Under the highest‑impact scenario, a “short‑lived but severe” jump in energy prices would push average food inflation to about 6.4% during 2026.

That translates into the average household’s grocery bill increasing by over £150 annually, thereby piling extra strain on tight family finances just as energy bills are expected to rise this summer. 

“Even in the best case scenario, the conflict in the Middle East is likely to prolong the timeline for recovery from the cost-of-living crisis,” pointed out James Walton, chief economist at IGD.

Indeed, even a “more moderate” energy shock would raise average food inflation to approximately 4.8% in 2026, according to IGD’s modelling.

Meanwhile, in a baseline case with no Middle East conflict, food inflation would still average about 3.8% over the year. 

Walton noted that persistently high food prices continue to fuel accusations of excess profits for businesses, based on the assumption that rising prices translate into higher margins. 

“Our analysis shows that the evidence points in the opposite direction: margins for basic food and drink remain exceptionally thin, and in many cases have fallen in recent years,” he explained. 

“When margins are this tight, businesses have limited capacity to absorb global shocks, invest in resilience or protect supply. 

“Over time, that increases the risk of weaker availability and greater price volatility.”

Source: The Independent