British food price inflation will reach up to 3.9% this year and nearly 7% in 2027, driven by Middle East disruption, rising input costs and extreme weather linked to El Nino, a prominent grocery industry researcher said on Wednesday.
"Food inflation's current weakness will not last. Stock buffers and hedging have delayed, not removed, the pressure building from disrupted energy markets and extreme weather," James Walton, chief economist at the Institute of Grocery Distribution, said.
The IGD forecast average UK food inflation at between 2.9% and 3.9% for 2026, rising to 5.6% to 6.6% in 2027 and 5.3% to 6.3% in 2028. The Bank of England fears higher food prices drive up overall inflation expectations, which can lead to price pressures becoming embedded in the economy.
On El Nino, the IGD said evidence indicates an extremely severe event, with effects on yields, quality and availability likely to persist well into 2027 and beyond. Fruit and vegetables were expected to make the largest contribution to higher food inflation, reflecting their shorter production cycles and high sensitivity to weather.
The IGD said greater productive capacity, ideally domestically, would help improve resilience across the food system. Its forecasts generally echo numbers published earlier this month by industry body the Food and Drink Federation.
Office for National Statistics data showed that food and drink inflation in July fell to 1.3%, its lowest since August 2024. August data will be published on Wednesday. UK grocery price inflation increased to 2.3% over the four weeks to September 6, market researcher Worldpanel by Numerator said on Tuesday.
