UK Food Price Inflation Set for Near-Record High in 2027

UK food price inflation is expected to reach nearly 7% in 2027, driven by factors such as Middle East disruption, rising input costs, and extreme weather linked to El Niño. This prediction comes from James Walton, chief economist at the Institute of Grocery Distribution (IGD). Walton warned that 'food inflation's current weakness will not last' due to delayed but still imminent pressure from disrupted energy markets and extreme weather.

The IGD forecasted 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. Fruit and vegetables are expected to make the largest contribution to higher food inflation due to their shorter production cycles and high sensitivity to weather.

The Bank of England fears that higher food prices can drive up overall inflation expectations, leading to price pressures becoming embedded in the economy. The IGD suggested that greater productive capacity, ideally domestically, would help improve resilience across the food system.