The latest forecasts from the Institute of Grocery Distribution (IGD) predicted in its Viewpoint report has warned retail food inflation is to peak further this year, at 5.1% by late summer.
The figure represents a significant outpacing of general inflation and will undoubtedly put more pressure on shoppers and businesses alike who are already feeling it.
The report goes on to outline how food prices are now the top concern for UK shoppers, overtaking worries about energy costs, as they brace themselves for higher food bills in the second half of 2025.
However, looking ahead to 2027, it offers cautious optimism, forecasting a gradual decline in food inflation to 1.8% by mid-2027. Yet there is no denying the near-term outlook remains challenging, with inflationary pressures fuelled by a potent mix of regulatory costs, extreme weather and global commodity volatility.
According to IGD’s data, 83% of shoppers actually expect escalating retail food prices. This unease is reflected in the IGD Shopper Confidence Index, which dipped to +1 in June, down two points from May, with three-quarters of consumers also anticipating tax hikes.
Michael Freedman, head of economic and consumer insight at IGD, said: “Amid economic uncertainty, shoppers are cautious with their finances, increasing private label purchases while reducing impulse and indulgence buys.
“We identified that only 29% of consumers plan to cut back on grocery spending, suggesting many have already tightened their budgets and have little room to cut back further.
“Instead, shoppers are more likely to look for savings on discretionary purchases like clothing and eating out, underscoring a clear prioritisation of food shopping over other categories. Businesses should adapt to shifting customer behaviours by offering value, convenience and memorable experiences to attract customers and drive growth.”
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