UK food inflation seen climbing to nearly 7% by 2027, warns IGD

British food price inflation is set to accelerate sharply over the next three years, according to forecasts from the Institute of Grocery Distribution (IGD), which expects the rate to approach 7% by 2027.

The grocery industry researcher projects average UK food inflation of between 2.9% and 3.9% in 2026, rising to 5.6%-6.6% in 2027 and easing slightly to 5.3%-6.3% in 2028.

James Walton, chief economist at the IGD, said the current softness in food inflation would not persist. Stock buffers and hedging arrangements have postponed rather than eliminated the pressure accumulating from disrupted energy markets and extreme weather, he said.

A severe El Nino event is a key factor in the outlook. The IGD said evidence points to an extremely severe episode, with consequences for crop yields, quality and availability likely to last well into 2027 and beyond.

Fruit and vegetables are expected to contribute most to higher food inflation, given their shorter production cycles and greater sensitivity to weather conditions. The IGD added that expanding productive capacity, ideally within the UK, would strengthen resilience across the food system.

The forecasts broadly align with figures published earlier this month by the Food and Drink Federation, another industry body.

The warning comes against a backdrop of relatively subdued recent price data. Office for National Statistics figures showed food and drink inflation fell to 1.3% in July, its lowest reading since August 2024, with August data due on Wednesday. Separately, market researcher Worldpanel by Numerator said UK grocery price inflation rose to 2.3% in the four weeks to September 6.

The Bank of England is watching food prices closely, concerned that sustained increases could lift overall inflation expectations and embed price pressures in the wider economy.