FDF response to June food inflation figures

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

“It’s positive to see food and drink manufacturers managing to keep food prices stable in the face of rising input costs. What’s become clear is that food manufacturers have worked hard since Russia’s invasion of Ukraine to diversify their supply chains and shore up their resilience against further major supply shocks. We continue to anticipate rising food price inflation as the year goes on, however this is likely to be lower, come later and plateau for longer than the previous inflationary cycle.

“With disruption the new norm for the food system, it’s critical that the new Prime Minister takes food security seriously and is ready to work in partnership with industry to ensure our food system is investing for growth and resilience, from vital tech adoption to future-facing skills.”

Background:

• Food and non-alcoholic drink prices rose by 1.7% in the 12 months to June 2026, down from 2.2% the previous month. On a monthly basis, food and non-alcoholic drink prices fell by 0.2% in June 2026.
• Prices rose the fastest for fish (9.1%), preserved fruit (8.6%) and water (8.2%) and confectionary products (6.4%).
• Prices fell for 16 categories, with the largest drops for pizza (-6.7%), butter (-6.6%) and flours (-5.1%).
• The industry has learnt lessons from the energy crisis brought on by the Ukraine invasion and has adapted its approach to energy and commodity risk. We are now seeing that food and drink manufacturers have been fixing the prices they pay for energy and ingredients much further ahead, often for 12 to 18 months and sometimes up to two years. In many cases, more than half of their energy needs are now covered by these long‑term agreements with the rest spread across medium and short‑term arrangements.
• This means that while historically it took around 7 to12 months for input cost movements to feed through to consumer prices, current evidence suggests this lag is now longer, and we might see less of a sharp peak.
• Strong upward pressures from energy markets, particularly gas and electricity futures, have not materialised to the extent that was expected.
• In line with its bi-annual schedule, FDF will publish a new forecast in the week commencing 7 September.