UK Retail Food Inflation to Hit 5.1% Peak, Outpacing General Price Rises

UK retail food inflation is projected to peak at 5.1% during the summer of 2025, significantly outpacing the broader inflation rate, according to the Institute of Grocery Distribution (IGD).

The figures are detailed in IGD’s latest Viewpoint report, UK Inflation Forecasts 2025–2027.

This peak is expected to place further strain on both households and businesses, as the UK economy continues to contend with subdued growth and ongoing pricing pressures.

The report highlights that food prices have now overtaken energy costs as the top concern for UK shoppers, signalling a major shift in consumer anxiety as households brace for higher grocery bills.

Looking further ahead, IGD forecasts that food inflation will gradually decline to 1.8% by mid-2027. However, short-term prospects remain constrained by several inflationary drivers, including regulatory burdens, adverse weather conditions, and volatility across global commodity markets.

According to IGD’s latest shopper data, 83% of UK consumers expect food prices to rise further. A similar proportion (81%) express concern about the rising cost of eating out. Meanwhile, the IGD Shopper Confidence Index dropped to +1 in June—down two points from May—with 75% of consumers anticipating tax increases.

Ahead of the busy Christmas trading period, consumer sentiment remains fragile due to persistent pricing pressures and ongoing geopolitical uncertainty.

Although 29% of consumers say they plan to reduce their grocery spending, this relatively low figure suggests that many households have already made cutbacks and have limited flexibility to economise further. As a result, discretionary categories such as clothing and dining out are likely to see greater spending restraint, as shoppers prioritise food and essential items.

The report also notes a growing polarisation in consumer confidence. One in four UK shoppers (25%) expect their financial situation to deteriorate over the coming year. This rises sharply to 41% among lower-income households—a ten-point increase since May 2024—while only 11% of higher earners anticipate being worse off, a decline of five points.

While financially secure consumers remain open to premium grocery purchases and dine-in experiences, innovation within the sector is increasingly being driven by Gen Z consumers. Their appetite for novel formats and global cuisines is creating new opportunities for brands to connect with emerging demand.

IGD concludes that retailers, manufacturers, and policymakers must remain responsive to these evolving consumer behaviours—particularly in the areas of value, convenience and experience—as they navigate the next stage of economic recovery and market adaptation.