UK Inflation to Lead G7 in 2025, Keeping Pressure on Fresh Produce Prices

Fresh produce businesses are bracing for continued cost pressures as the UK is forecast to experience the highest inflation among G7 economies this year and next, according to the International Monetary Fund’s (IMF) latest World Economic Outlook.

As reported by The Guardian, the report predicts that UK inflation will average 3.4% in 2025, up from the IMF’s earlier forecast of 3.2%, before easing slightly to 2.5% in 2026. The figures suggest that growers, importers, and suppliers across the food and horticulture supply chain could continue to face elevated costs for labour, energy, and transport well into next year.

Although the IMF has nudged up its growth forecast for the UK economy this year to 1.3%, it warns that “sticky” inflation remains a concern, driven by persistent price pressures in essentials such as food and utilities. The Bank of England’s most recent data shows consumer price index (CPI) inflation at 3.8% in August, with a peak of around 4% expected in September.

For the fresh produce industry, these figures underscore the ongoing squeeze between rising input costs and consumer resistance to further price increases. Many retailers have been attempting to absorb costs to maintain competitiveness, but the persistence of inflation could make further price hikes unavoidable.

The IMF’s deputy director for monetary and capital markets, Athanasios Vamvakidis, said: “Clearly markets are concerned about the UK economy, and we have seen more volatility in the UK compared to other advanced economies.” He cited above-target inflation and weak productivity as key factors keeping UK bond yields higher than elsewhere.

Meanwhile, IMF chief economist Pierre-Olivier Gourinchas suggested that some of the drivers of UK inflation — such as water bill increases and rail fare rises — are temporary, but warned that strong wage growth and shifting consumer confidence could keep inflation higher for longer.

He urged caution from policymakers, saying: “The path forward for the Bank of England should be very cautious in its easing trajectory and make sure that inflation is on the right track.”

Despite the inflationary pressure, the IMF still expects the UK to be the second-fastest growing economy in the G7, behind the United States, where GDP is forecast to rise by 2%.

For food producers, importers and exporters, the IMF’s message is clear: although the outlook for growth is holding up, the costs of doing business are unlikely to ease quickly. That means continued focus on supply chain efficiency, energy reduction measures and innovation will remain crucial for protecting margins across the fresh produce sector.