FDF response to May food & drink inflation figures

Dr Liliana Danila, Lead Economist, The Food and Drink Federation, (FDF) said:

“Food and drink inflation shot up in May 2025, reaching 4.4% compared to 3.4% in April. These figures are being driven by rising energy and ingredients costs. Food manufacturing is an energy intensive sector, and wholesale gas prices are 7.8% higher compared to last May, as UK businesses face significantly higher industrial energy costs compared to other nations. Meanwhile, the price of ingredients has also surged. For example, in the last two years, the price of cocoa has tripled, while wholesale butter prices are also 55% higher than last year. Recent and upcoming regulations are also bringing additional costs to manufacturers.

“With these price increases being coupled with a drop in consumer confidence and a fall in retail sales, food manufacturers have been absorbing rising costs for several years. Recent geopolitical uncertainty is also likely to result in higher pressure on energy and imports, and so unstable manufacturing costs are likely to persist. As a result, we now expect to reach our forecast of 4.8% food and drink inflation for December sooner than anticipated.”

Background:

• The ONS reports on 49 main food and non-alcoholic drink product categories, which have seen a mixed performance. Seven categories saw inflation in double digits: butter (18.2%), chocolate (17.7%), beef and veal (17.0%), coffee (13.9%), lamb and goat (11.2%), edible offal (10.1%), and cocoa and powdered chocolate (10.1%). Prices fell the fastest for: olive oil (-6.0%), pasta products and couscous (-6.0%), and rice (-2.9%).
• Food and non-alcoholic drink inflation provided the largest contribution to overall inflation this month.
• Food and non-alcoholic drink inflation in May was the highest recorded since February 2024.