Food suppliers and supermarket bosses have warned the government of a worsening inflation crisis unless the Chancellor takes action to stop the taxes “hammering” the sector.
After new ONS figures for July showed the highest rate of food inflation since February 2024, industry leaders said they resulted from a damaging combination of commodity price increases and a raft of government interventions.
The incoming EPR packaging tax, the impact of the Employment Bill and energy costs were all acting to heap upward pressure on inflation.
“Today’s figures show that food and drink manufacturers are being squeezed on all sides,” said Jim Bligh, Food & Drink Federation director of corporate affairs and packaging.
“Energy prices remain high, and the cost of some key ingredients has surged in recent years.
“Cocoa prices are at a 45-year high, and both olive oil and butter prices have doubled since 2020.
“With high commodity prices, the new £1.4bn packaging tax, and increased National Insurance costs, it’s no surprise that many food and drink manufacturers have seen their costs increase by 10% or more this year.
“Manufacturers have absorbed as many of these costs as possible, but consumers will still see higher prices at the till. We expect that high food and drink inflation will persist through the year, so any fresh costs for businesses in the autumn budget will inevitably put yet more pressure on shoppers’ pockets.”
Food and non-alcoholic drink inflation was 4.9% in July 2025 year on year, up from 4.5% in the 12 months to June.
Five categories saw inflation in double digits: beef and veal (24.3%), coffee (18.0%), butter (17.8%), chocolate (17.2%) and whole milk (11.3%).
The BRC also warned the “swathe” of costs facing retailers had left them “no room to manoeuvre” away from inflationary drivers and also called on the Chancellor to change tack.
“The cause of UK food inflation is pretty clear to us”, added Shore Capital analyst Clive Black.
“The policies of the government. The state is hammering the hospitality and retail sector, all of which suggests UK food inflation is going to remain.”
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