Food inflation is set to remain a major challenge for retailers and consumers well into 2028, with new forecasts from the industry body IGD suggesting prolonged cost pressures will continue to weigh on household budgets and food businesses alike.
IGD now expects food inflation to peak at 5.5 per cent in the second half of 2026, averaging between 3.7 per cent and 4.7 per cent across the year. While this is lower than the organisation’s most severe scenario of 8 per cent outlined earlier this year, the inflationary impact is now expected to be more prolonged.
The latest forecast indicates food inflation will remain elevated throughout 2027 at between 3.2 per cent and 4.2 per cent, before easing to between 2.3 per cent and 3.3 per cent in the first half of 2028.
According to IGD, households with children will need to find an additional £203 for food and drink this year, followed by a further £207 in 2027, compared with current price levels.
The organisation said that although a peace deal has been announced between the US and Iran, the effects of recent geopolitical tensions, energy market volatility and supply chain disruption are continuing to feed through into food prices with a time lag.
James Walton, chief economist at IGD, said: “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 per cent due to the disruption already experienced.
“Energy, labour and policy costs are continuing to build gradually, with many becoming structural rather than easing quickly, as well as climate risks which can affect supply. This is keeping sustained upward pressure on prices, which is expected to continue into 2028.”
IGD warned that the latest forecasts come on top of a sustained rise in food prices since 2021. By the end of 2027, UK retail food prices are expected to be more than 40 per cent higher than pre-pandemic levels, leaving households increasingly vulnerable to further price shocks.
The organisation said concerns about food costs are intensifying among shoppers. Its Shopper Confidence Index remained subdued at -2 in May, while 94 per cent of consumers cited food prices as a key concern – the highest level recorded in three years and higher than during the peak of the cost-of-living crisis in early 2023.
“The businesses that pull ahead in this environment will be the ones building resilience and making sharper choices while uncertainty is still unfolding,” Walton noted.