UK consumers are facing another significant increase in food costs, with prices expected to rise by almost 5% next year, according to a recent report.
The Institute of Grocery Distribution (IGD) has predicted a substantial rise in food prices for 2025, estimating a 4.9% increase, as detailed in their ‘Hungry For Growth’ report. This follows an alarming trend of climbing grocery bills that have surged by 40% since 2020. The Evening Standard highlighted these findings, emphasising the anticipated financial burden on UK households.
Several factors contribute to this expected rise in food costs. Primarily, high labour expenses—driven by an increase in the National Living Wage and elevated National Insurance contributions—are key contributors. Additionally, the implementation of the Windsor Framework is likely to push up food import costs starting July 2025, further pressuring prices upwards.
This economic scenario suggests that food producers will only be able to absorb between 20% and 40% of these increased costs, meaning a significant share of the burden will fall on consumers. IGD’s chief economist, James Walton, remarked on the persistent inflationary pressures, noting that the rising cost of living, alongside heightened employment and regulatory expenses, will sustain inflation. Walton further explained that while consumers would strive to economise, the pervasive nature of these cost pressures would have widespread impacts.
Interestingly, recent data from the British Retail Consortium (BRC)-NielsenIQ Shop Price Index showed a deceleration in food inflation, which dropped to 1.8% in November 2021, the lowest level since November 2021. However, prices for specific items like seafood, tea, and coffee have remained steep, complicating the overall inflation landscape.
As the UK braces for another year of financial challenges, the projected increase in food prices underscores the mounting pressures on households. With regulatory and labour costs set to rise, consumers must prepare for a more constrained budgetary environment, highlighting the importance of strategic financial planning in 2025.
