Understanding UK food inflation
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Because food is a daily necessity, rising prices are immediately visible and widely felt, unlike many other household costs, making it one of the most tangible pressures on living standards.
Since January 2020, food prices have risen sharply by around 39%, with inflation persistently higher than the 1.5–2.0% historical average and above overall inflation. This has been driven by successive shocks to energy, commodities, labour and regulation.
The war in Iran hits an industry that is less resilient than it was in 2020, after five years spent stripping out costs and squeezing efficiencies from supply chains and operations. This makes the shock harder to absorb, and the impact likely more severe.
Our latest analysis explains why food inflation has risen in recent years – and what we expect could happen next.
Key drivers of food inflation
Our report explains the key drivers of food inflation:
- Energy costs
- Agricultural commodities
- Regulation
- Labour costs
- Market structure
- Supply chain disruptions
It also provides an overview of the dynamics across the supply chain that can feed into manufacturers’ costs and the prices that eventually pass through to consumers.
What’s next for food inflation?
We have revised our food inflation forecast upwards and now expect inflation to reach between 9–10% by December 2026, compared with our previous forecast of 3.2% in September 2025.
The war in Iran has already delivered a significant economic shock. Its full impact on the global and UK economy will depend on both the duration and intensity of the conflict.
In particular, outcomes will be shaped by how long the Strait of Hormuz remains effectively closed, as well as the scale of physical damage to energy infrastructure in the Middle East.