Shoppers have been cautioned about potential further increases in food prices in the upcoming months despite a decrease in inflation. Food inflation dropped to 2.2% in May, the lowest rate since December 2024, down from April’s 3%. Karen Betts, the chief executive of the Food and Drink Federation, highlighted that the repercussions of the Middle East conflict are still affecting prices.
The closure of the Strait of Hormuz has led to higher energy and fertilizer expenses, resulting in increased production and distribution costs. Betts emphasized that although food inflation eased in May, consumer prices have not fully reflected the inflationary impact of the strait’s closure. She explained that it typically takes several months for the increased costs incurred by farmers, processors, and manufacturers to be reflected in retail prices due to long-term contracts for energy and ingredients.
Manufacturer input costs, including transport, packaging, and energy, are on the rise, indicating an expected increase in food inflation throughout this year and into the next. According to data from the Office for National Statistics (ONS), prices surged the most for beef and veal (9.4%), offal (9.2%), preserved fruit (9.0%), and confectionery products (8.8%), while prices declined for 15 categories, notably flours (-6.1%), olive oil (-4.2%), and jams and marmalades (-3.0%).
Industry leaders had previously warned of potential food price hikes extending into 2028, with the Institute of Grocery Distribution (IGD) projecting food inflation to average between 3.2% and 4.2% next year and 2.3% to 3.3% in the first half of 2028. Household expenses for food and beverages are estimated to increase by around £203 this year and an additional £207 next year.
Despite expectations of a rise to 3%, the Consumer Prices Index (CPI) remained stable at 2.8% in May, lower than economists’ predictions. Grant Fitzner, chief economist at the ONS, explained that inflation steadied due to a balance between higher transport costs and lower food prices. Airfares, vehicle taxes, and petrol prices contributed to the upward movement in transport costs, while reductions in meat, dairy, and vegetable prices, as well as domestic heating oil costs, counteracted inflationary pressures.