UK Households Face Sustained Food Inflation Through 2028 But Lower Peak

Families with children will need to find an additional £203 for food and drink spending this year as food inflation in the UK is set to remain a challenge for consumers and the food industry for several more years, warns IGD.

New analysis from the Institute of Grocery Distribution (IGD) suggests that next year UK shoppers will face a further £207 increase in grocery bills, compared with current expenditure levels, even though the anticipated peak in food inflation is now lower than previously feared.

IGD has revised its forecasts downwards; now projecting food inflation to reach a high of 5.5% during the second half of 2026, with annual inflation averaging between 3.7% and 4.7% this year.

While earlier modelling considered a worst-case energy-driven inflation spike of 8%, at present the grocery research organisation believes the market will experience a less dramatic peak. 

Impact To Last Longer

The inflationary effects are expected to last much longer, however, meaning the impact will extend into 2028, and create ongoing cost pressures throughout the food supply chain.

“The impact of geopolitical conflict usually takes time to filter through to raised food prices and therefore, despite the peace deal announced by the US, we expect food inflation to peak at 5.5% due to the disruption already experienced,” commented James Walton, chief economist at IGD.

“Energy, labour and policy costs are continuing to build gradually, with many becoming structural rather than easing quickly, as well as climate risks which can affect supply. This is keeping sustained upward pressure on prices, which is expected to continue into 2028.

“While inflation may not peak as high as the most severe scenario, there is little room for relief as prolonged pressure will continue to weigh on both industry and household budgets, with an extra £203 to find this year for households with children,” Walton added.

Further Pressure For Food Businesses

With consumers continuing to tighten their purse strings over growing anxiety of further price rises, margin pressure will remain on food businesses and retailers. 

Furthermore, households on tighter budgets are expected to face increasing financial strain, particularly those on lower incomes, potentially leading to more fragmented consumer spending patterns and greater uncertainty for food businesses.

“The businesses that pull ahead in this environment will be the ones building resilience and making sharper choices while uncertainty is still unfolding,” noted Walton.

IGD’s forecast points to UK food inflation averaging between 3.2% and 4.2% in 2027 before easing to 2.3% to 3.3% during the first half of 2028, remaining above target levels for an extended period.

Growing Concern Among Shoppers

The latest outlook follows several years of sustained food price growth since 2021. 

By the end of 2027, UK retail food prices are expected to be more than 40% higher than they were before the Covid-19 pandemic, leaving consumers more vulnerable to future cost increases.

IGD said there is growing concern among shoppers. 

Its May 2026 Shopper Confidence Index remained in negative territory at -2, reflecting continued caution among consumers. 

Research from the organisation found that food prices and household energy bills remain the dominant financial concerns.

Concern about food prices has reached its highest level in three years, with a greater proportion of consumers feeling worried about grocery costs than during the peak of the cost-of-living crisis.

IGD data showed that 94% of shoppers cited food prices as a concern, compared with 91% during the height of the cost-of-living crisis in January 2023. 

Energy costs were identified as a worry by 86% of respondents.

IGD said it will continue to track developments across energy markets, commodities, and policy changes, updating its forecasts as market conditions evolve.

Source: Talking Retail