Food price inflation is set to peak at more than 5% later this summer, significantly outpacing general inflation.
A new report from IGD puts the average rate of food inflation forecast for this year at 4%, up from its previous forecast of 3.3%.
IGD says the cost of food is now the number one concern for consumers, and warns families need to brace themselves for even higher bills before inflation begins to fall later in the year.
The body’s Viewpoint report, based on research carried out last month among more than 1,000 adults, found prices had overtaken fears over rising energy bills as the biggest concern of households.
It said it expected food inflation to peak at 5.1% in late summer.
Looking ahead to 2027, the report offers cautious optimism, forecasting a gradual decline in food inflation to 1.8% by mid-2027. However, the near-term outlook remains challenging, with inflationary pressures fuelled by a potent mix of regulatory costs, extreme weather events, and global commodity volatility.
IGD’s report calls on retailers, manufacturers and policymakers to stay closely attuned to shifting consumer behaviours, particularly around value, convenience, and experience.
“Amid economic uncertainty, shoppers are cautious with their finances, increasing private label purchases while reducing impulse and indulgence buys,” said Michael Freedman, head of economic and consumer insight at IGD.
“We identified only 29% of consumers plan to cut back on grocery spending, suggesting many have already tightened their budgets and have little room to cut back further.
“Instead, shoppers are more likely to look for savings on discretionary purchases like clothing and eating out, underscoring a clear prioritisation of food shopping over other categories. Businesses should adapt to shifting customer behaviours by offering value, convenience, and memorable experiences to attract customers and drive growth.”
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