The Food and Drink Federation (FDF) has updated its food and drink inflation forecast, predicting that it could hit 5.7% by December.
This is up from the previous forecast of 4.8%, and FDF said this was as food manufacturers “suffered the financial burden” of Government policies.
Between July 2020 and July 2025, food and drink prices rose by 37%, which was higher than overall UK inflation at 28%. Milk, cheese and sugar were said to have seen some of the steepest increases, with the price of sugar up by 56%.
According to FDF, the trend was driven by surging production costs, and over the first three years of this decade, agricultural commodity prices rose by 51%. However, despite most of these costs stabilising in 2024, FDF found that food and drink inflation has persisted at “well above the average rate” through 2025, and the rate of rising food prices in the UK has also outpaced other European countries. By July, UK food inflation stood at 4.9%, higher than in France (1.8%), Germany (2.7%), or Spain (2.8%).
FDF stated that this showed that a “key driver” of food inflation in the UK was the cost of Government regulations and policy decisions. This included changes to employer National Insurance Contributions, costing the food and drink sector £410 million a year, and £1.1 billion for the new packaging tax, Extended Producer Responsibility (EPR).
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.”
FDF found that, over recent years, food manufacturers have absorbed rising costs to ease the pressure on shoppers at the tills, and average production costs increased 6.3% last year, well above the rate of inflation. However, it also found that having faced such a long period of cost pressures, price rises have eventually made their way to supermarket shelves.
Households reportedly spent £70.50 a week on food and drink, nearly double the £38.50 spent on energy, which showed the weight price rises will have on households, who can’t easily cut back on this essential spend.
Karen Betts, chief executive at the FDF, said: “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.”
Action for Government to take
Food and drink manufacturing has a £14 billion growth opportunity that could be unlocked with policies to incentivise investment in the sector. This could include supporting more automation and tech adoption alongside, the transition to a higher skilled workforce by delivering on the flexibility promised in the Growth and Skills Levy.
Additionally, FDF urged Government to “bear down” on existing cost pressures. For example, the £1.1 billion fees for the EPR scheme must be used to boost recycling rates, it said, so that producers aren’t hit with higher bills in coming years, and suggested this could also include not increasing the current rates that industry pays on taxes.
It went on to say that ensuring that the food and drink industry’s interests are represented as negotiations for a renewed trade agreement with the EU progress will help to slow rising costs in coming years, and while the negotiations continue, it’s also important that there’s consistency at borders “so no further unnecessary burdens are put on businesses”.
