UK food inflation ‘could hit 9% this year’ as Iran war drives up energy prices | Food & drink industry
Figures show UK food inflation could reach 9 per cent this year even if the Strait of Hormuz opens in the next few weeks as the war in Iran drives up energy prices.
The Food and Drink Federation (FDF), which represents 12,000 food and drink manufacturers, has predicted that prices will increase by “at least” 9% by the end of 2026; This is almost triple the 3.2% estimate made before the Middle East conflict.
FDF’s chief economist Dr. Liliana Danila said the industry is currently facing major increases in energy, transportation and packaging costs, as well as disruptions in supply chains.
“The current situation is unprecedented and difficult to predict,” he said. “Given the size and pace of these cost increases, and despite companies’ efforts to avoid passing on price increases, it is clear that food inflation will rise in the coming months.”
The 9 percent forecast assumes that the key strait of the Hormuz shipping canal will reopen to cargo traffic within the next two to three weeks and that most major energy facilities such as oil, gas and fertilizer fields will return to normal within a year.
The warning came as Chancellor Rachel Reeves prepared to meet the bosses of Britain’s biggest supermarkets on Wednesday afternoon.
Reeves is expected to meet executives, including the bosses of Sainsbury’s, Tesco and Morrisons, to discuss the potential impact on the cost of living and possible supply squeezes triggered by conflict in the Middle East.
Farmers and producers in the UK have warned there could be a shortage of domestic tomatoes, cucumbers, peppers and aubergines without government help.
Many businesses that usually fix their energy contracts in April will be hit by a sharp increase in costs from Wednesday. Household bills will fall until July but are expected to rise after that.
The government is under increasing pressure to provide support on higher energy bills; However, it has been suggested so far that any aid will be directed to the most vulnerable households.
In an interview with the BBC, Reeves said the government was “looking at ways we can support people based on their household income”.
But he did not commit to reducing fuel duty or VAT on gasoline, saying he had to be careful about promising to cut prices too much, as this could increase overall inflation, interest rates and taxes.
