Households with children will need to find an extra £203 for groceries this year, according to fresh analysis from the Institute of Grocery Distribution.
The IGD has forecast food inflation to peak at 5.5% in the second half of 2026. While significantly below the 8% “severe” energy shock scenario, the impact of the Iran war on food prices is expected much longer, into 2028.
Energy prices have not spiked quite as sharply as feared, and with a preliminary peace deal signed between the US and Iran, further shocks had now become less likely, the charity said.
But IGD chief economist James Walton warned that while inflation might not peak as high as the most severe scenario, there was “little room for relief” for consumers.
“The impact of geopolitical conflict usually takes time to filter through to raised food prices and therefore, despite the peace deal announced by the US, we expect food inflation to peak at 5.5% due to the disruption already experienced,” he said.
“Energy, labour and policy costs are continuing to build gradually, with many becoming structural.”
Walton added that climate change-related risks to supply would only exacerbate inflation.
The IGD, which has published food inflation forecasts since 2022, predicted food inflation to average 3.7%-4.7% in 2026, before edging downward to 3.2%-4.2% in 2027.
In the modelled scenario, price rises would remain above the UK government’s target of 2% throughout 2028.
By the end of 2027, UK retail food prices are likely to be 40% higher than they were pre-Covid.
The IGD’s updated forecasts followed last week’s publication of the Food Foundation’s Broken Plate report, which showed struggling families had to spend 85% of their disposable income to achieve a healthy diet.
The price gap between healthier and less healthy food was now the widest it had been in over a decade, the report found, with healthier food nearly twice as expensive per calorie.
No comments yet