Households with children will have to find an extra £203 for food and drink this year — and another £207 next year — as industry leaders warn that food prices will remain high into 2028. The Institute of Grocery Distribution (IGD) now expects food inflation to peak at 5.5% in the second half of this year, far longer than it predicted in March, and will average between 3.2% and 4.2% next year before finally dropping to 2.3% to 3.3% in the first half of 2028.
The cost of buying food in shops is now likely to be up by 40% on pre-Covid levels, according to the IGD. For shoppers, the pressure continues to intensify, with worries about food prices reaching their highest level for three years — even higher than during the height of the cost-of-living crisis. "For many households the risk is not just rising prices, but also a return of cost-of-living anxiety," the IGD said.
“Households face £203 extra on food this year and £207 next year as prices stay high until 2028.”
James Walton, IGD chief economist, attributed the prolonged inflation to geopolitical conflict, energy costs, labour and policy costs, and climate risks. "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. He added that energy, labour and policy costs are continuing to build gradually while climate risks can affect supply, keeping sustained upward pressure on prices.
The peaceful deal between the US and Iran has not yet eased pressures, as supply chain disruptions from earlier conflicts continue to feed through. The IGD had previously expected a quicker easing, but now forecasts that the impact will be felt by businesses and shoppers for longer than initially thought.
For lower-income households, the blow is even harder. "The pressure will continue to intensify," the IGD warned, as food price rises since 2021 have already stretched budgets. The new predictions mean that families are bracing for at least two more years of elevated costs, with no significant relief expected until 2028.