FDF warns UK food inflation could hit 5.7 percent by Christmas

UK food and drink prices are set to rise even further this year, with the Food and Drink Federation (FDF) warning that inflation could reach 5.7 percent by December, up from its previous 4.8 percent forecast.

Between July 2020 and July 2025, food and drink costs surged 37 percent, far outpacing overall UK inflation of 28 percent. Milk, cheese, and sugar have seen particularly steep increases:

Table showing how staple food prices have surged over the past five years (2020–2025)

Dr Liliana Danila, Lead Economist at the FDF, said:

Food and drink inflation has been climbing steadily all year, with no sign of easing. Looking at the longer-term picture, today’s prices are steeper than anything in recent decades. The five-year average is running at more than double the rate seen between 1990-2010.”

Inflationary spikes between 2020 and 2023 were driven by geopolitical shocks which created supply chain disruptions and sharp rises in energy and raw ingredients. With most of these costs now stabilised, this new inflation surge is fuelled by the financial impact of domestic policies, now trickling down to supermarket shelves.”

Outpacing European nations

The rise in UK food inflation has outpaced other European nations. By July 2025, UK food prices had risen 4.9 percent, compared with 1.8 percent in France, 2.7 percent in Germany, and 2.8 percent in Spain. The FDF attributes much of this to government policy and regulatory costs, including £410m annually from increased employer National Insurance Contributions and £1.1bn from the new Extended Producer Responsibility (EPR) packaging tax.

Karen Betts, Chief Executive of the FDF, added:

UK food price inflation is running persistently high. It’s an outlier against comparable European economies and it’s persisting in the absence of energy or commodity shocks. The costs are such that companies can no longer absorb them and are having to pass at least some of them onto consumers.

As this Autumn’s Budget looms, it’s critical that government does not add further to the already high costs of regulation in our sector. We’ve been hit by rising taxes, employment costs, and a new packaging tax.

We’re calling on government to help us turn this tide by partnering with industry to attract investment, accelerate productivity growth, boost skills, and grow exports across our sector. This will help counter inflation and secure a more resilient future for UK food and drink manufacturing.”

Rising production costs have already hit manufacturers, who absorbed a 6.3 percent increase last year, well above general inflation. However, after sustained pressure, these costs are now reaching supermarket shelves. Households spend an average £70.50 per week on food and drink, almost double the £38.50 spent on energy, highlighting the significant impact on household budgets.

The FDF says the UK food and drink manufacturing sector could unlock a £14bn growth opportunity with supportive government policies. It recommends using EPR fees to improve recycling rates, so producers are not unfairly penalised, freezing industry tax rates such as the Soft Drinks Industry Levy, supporting smoother EU trade negotiations to reduce import costs, and investing in automation, technology adoption and workforce skills to boost productivity and competitiveness.

With domestic policy costs now a primary driver of food inflation, the FDF is calling for collaboration between government and industry to protect consumers and strengthen the resilience of UK food and drink manufacturing.