UK Food Inflation Heads for 5% Amid Rising Costs
UK food inflation is expected to climb towards 5% by early 2027, despite recent calming news in grain markets. According to Shore Capital, the US Department of Agriculture's September WASDE report revealed higher wheat supplies and fuller stores. Global wheat supplies were increased by 3.5 million tonnes to 1,103 million tonnes, with ending stocks raised by 3 million tonnes to about 276 million tonnes.
The update was seen as a positive influence on the bakery and livestock trades, giving them more confidence to plan procurement ahead of the northern hemisphere harvest completion. However, analysts Clive Black and Akhil Patel still expect British food inflation to rise from 1.3% in July towards a range of 3% to 5% by the close of 2026 and into early 2027.
The main drivers of this expected increase are Brent crude at $107 a barrel, which lifts distribution and packaging costs, as well as fertiliser prices sitting around 15% above pre-conflict levels. Additionally, UK dairy prices are expected to firm after a poor summer for pasture, while European sow culls could push pig meat costs higher in 2027.