It went on to say that food inflation was expected to reach 3.9% by December 2026, peak at 6.4% in July 2027 and be higher than historical averages throughout 2027.

FDF said this was the result of the shock of the conflict in Iran, coupled with the impacts of “extreme weather” on the global food supply chain. It said that manufacturers had worked hard to protect consumers from the initial shock of the Iran war, but said that their resilience was “wearing thin”.

It urged Government to take the UK’s food security seriously by relieving immediate regulatory pressure, as the inflationary fallout of the Iran war is expected to be a longer plateau. FDF said it will come later than previous shocks, such as the invasion of Ukraine, when food inflation peaked at more than 19%.

FDF’s latest Food Inflation Forecast details that gas prices have more than doubled since February 2026 (ONS and MarketWatch), while UK electricity prices are some of the highest in Europe, which was concerning as energy is required at every stage of the food production process. UK diesel prices have also risen more than a quarter (28.6%) since the start of the conflict in the Middle East.

Climate related events were compounding these problems, said FDF, causing the cost of many key ingredients to skyrocket. Wheat is up 45%, cocoa by more than 100%, rice 60%, sugar 27% and coffee 22% (Bloomberg Agricultural Index), while produce grown in the UK has increased by almost 10% in the last year (Gov UK). Droughts across the UK and Europe this summer have put further strain on supply, meaning manufacturers will also face higher costs for fruits, vegetables and grains in the months ahead.

FDF found that businesses across the food system are adapting their ways of working, including diversifying supply chains and hedging their contracts more, to be better able to weather disruptions. As a result, it’s likely that the change in inflationary pattern to a longer plateau is “likely to be repeated” for other shocks.

Government urged to pause plans to change promotion rules

In 2025, FDF estimates that five Government regulations alone added £2 billion of costs to the sector, including EPR, changes to employers’ NI contributions, the Plastic Packaging Tax and changes to advertising restrictions.

While many costs are baked-in, it said, Government can act now to keep a lid on further price rises and protect consumers from a more severe hit. For example, by offering targeted support with energy bills for the sector, which other manufacturing industries already receive. It commented that Government must prioritise effectively implementing its current packaging and recycling reforms, which it said are “already adding billions” to the cost of making food. FDF urged Government to pause its plans to change advertising and promotion rules, which it said would take “significant resource” at a time when the sector is already stretched.

“Tackling the rising costs of food production will help with the cost of living, as well as giving businesses the confidence they need to invest in a resilient food system.”

Karen Betts, chief executive of The Food and Drink Federation (FDF), stated: “Food and drink manufacturers have kept food prices as low as possible during the energy shock since the closure of the Strait of Hormuz, including by driving new efficiencies in their operations. But they can’t do this indefinitely. The persistently higher costs of energy, logistics and packaging, compounded by this summer’s extreme heat, mean that food prices will rise this year, and we believe that rise will be sustained into 2027.

“As the Prime Minister has recognised, households need some breathing space. Tackling the rising costs of food production will help with the cost of living, as well as giving businesses the confidence they need to invest in a resilient food system. Food manufacturing is embedded in every postcode in the UK, so ensuring our industry is fairly supported with energy costs will support growth and jobs everywhere. Ensuring regulation is proportionate and paced will drive down our rapidly rising compliance costs.

“By taking action, Government can take the heat out of food inflation, help keep a lid on the cost of the weekly shop, and signal to hard-pressed food manufacturers that they take food security seriously.”