El Nino & Iran War Fuel UK Food Inflation to Soar

Rising food inflation looms large for the UK economy as the impacts of the Iran War and El Niño converge. The Institute of Grocery Distribution (IGD) has forecast average inflation to hit between 2.9% and 3.9% in 2026, rising to between 5.6% and 6.6% in 2027 and between 5.3% and 6.3% in 2028.

The IGD warns that although food stocks are plentiful at the start of the year, hedging and moderate demand have helped retailers absorb costs, these buffers are expected to weaken as political and climate-related pressures drive up the cost of doing business. The institute says the higher inflation predicted for 2026 has not disappeared but been deferred.

The IGD has classified El Niño as a high-severity risk, set to affect major food-producing regions, with impacts on yields, quality, and availability likely to persist well into 2027 and beyond. Fruit and vegetables are expected to make the largest contribution to higher food inflation due to shorter production cycles and sensitivity to weather conditions.

James Walton, chief economist at IGD, said: 'Food inflation's current weakness will not last... Shoppers have already adapted to repeated periods of high food price inflation.'