Food prices tipped to soar nearly 5% in 2025
12 December 2024, 11:14
Food prices are set to surge by almost 5% as the cost of living crisis deepens, a leading industry body has warned.
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The Institute of Grocery Distribution’s (IGD) “Hungry For Growth” report pinpoints food inflation as one of the biggest challenges for UK households in 2025.
It says the expected hike, which is predicted to reach 4.9%, will hit UK food businesses in three phases.
National Insurance and National Living Wage increases, set to come into force in April, mark the first phase.
There are also likely to be higher food import costs in July due to the post-Brexit Windsor Agreement framework with the EU.
In October, ramped up costs on packaging are expected as a result of the first payments on Extended ProducerResponsibility (EPR).
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The food production sector will only be able to absorb between 20% to 40% of the costs, with the remainder set to be passed onto consumers, the IGD says.
Food inflation is expected to surpass other types of inflation in both 2025 and 2026.
IGD chief economist James Walton, said: “We do not see food prices going down in the foreseeable future. The rising cost of living, combined with increased employment and regulatory costs, will keep inflation elevated.
“Consumers will undoubtedly look for ways to save money, but the impact of these cost pressures will be felt across the economy.
“For the food sector, the increased financial burdens are becoming harder to absorb, particularly for smaller players in the sector. The cumulative impact of multiple changes landing within a short period of time will drive significant cost into all food businesses across the UK.”
It comes after the Department for Environment, Food and Rural Affairs warned that food insecurity is rising in Britain.
Its report says: “There has been a notable decrease in food-secure households (defined as access by all people at all times to enough food for an active, healthy life) which has coincided with increased financial pressures to household budgets from both high general inflation and high food inflation.”
The access to food in Britain is threatened by climate breakdown, food inflation and Brexit, the report adds.
Meanwhile a lot of the UK’s imported food arrives from areas that have been threatened by drought or floods, made worse by global warming.
Inflation, which has in part been sparked by instability and conflicts across the globe, has driven up the cost of farming.
Leaving the EU, once the UK’s largest external source of food, has caused imports plummet since 2021.
