FDF responds to food inflation reaching 3.7% in March 2026

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

"The clouds are gathering, but the storm has not yet broken on rising food and drink inflation. The war in Iran has delivered a cost shock that is already too large for manufacturers to absorb in full. The impact on prices will take time to work its way through the system, but it's only a matter of time before it does. For manufacturers, long-term contracts with suppliers and retailers mean it can take up to a year for higher costs to be fully passed through. But where products are less processed, or supply chains are shorter, prices will move more quickly. As a result, absent of any government intervention, we expect a gradual but persistent pickup in food inflation, reaching around 9–10% by the end of the year.

“This means we’re in a crucial window for action to limit the impact on shoppers. We’re working with government to look at the levers they can pull now to support food manufacturers now to soften the blow on consumers later in the year.”

Background:

• Food and non-alcoholic drink prices rose by 3.7% in the 12 months to March 2026, up from 3.3% in the 12 months to February. On a monthly basis, food and non-alcoholic drink prices rose by 0.3%.
• Prices rose the fastest for beef and veal (18.8%), whole milk (12.7%) and confectionary products (11.1%).
• Prices fell for nine categories, with the largest drops for: flours (-6.8%), olive oil (-6.2%), and pizza (-2.6%).
• It will take 7-12 months for cost pressures on manufacturers to feed through to consumers
• FDF is calling on government to introduce time-limited, bespoke Food and Drink Energy Support (modelled on Energy Bill Relief Scheme, introduced following the invasion of Ukraine), including a cap for energy prices for food and drink manufacturers. It should be calibrated to help businesses through the most challenging period of price rises. It should include key SIC codes within food and drink manufacturing that are particularly energy intensive (which were identified as part of EBRS), and those that use the biggest share of energy