UK consumers are facing a potential 5% increase in food prices next year, as reported by the Institute of Grocery Distribution (IGD) in their ‘Hungry For Growth’ report.
The impending rise in food prices is a cause for concern among UK shoppers. According to the IGD, a 4.9% increase is expected in 2025, which could push grocery costs up to 40% higher than they were in 2020. The report attributes this surge to several factors, primarily the high costs of labour. The National Living Wage is set to rise, coupled with increased National Insurance bills.
The Windsor Framework, effective from July 2025, may exacerbate the situation by increasing import costs for food. This could lead to further inflationary pressure on grocery prices. Currently, the food production sector is projected to absorb merely 20% to 40% of these additional expenses, implying that the majority of the cost increase will be passed on to consumers.
James Walton, IGD’s chief economist, explains, ‘The rising cost of living, combined with increased employment and regulatory costs, will keep inflation elevated.’ This scenario places immense pressure on UK households, compelling them to search for new ways to reduce expenses. However, these cost pressures are not isolated to households but affect the broader economy.
Interestingly, the British Retail Consortium (BRC)-NielsenIQ Shop Price Index recently indicated a slowing in food inflation, reaching its lowest rate since November 2021. However, the prices of staple items such as seafood, tea, and coffee remain persistently high, challenging the overall positive trend. This suggests that certain sectors may continue experiencing inflation despite the general reduction.
As 2025 approaches, the anticipated increase in food prices poses a formidable challenge for UK households already grappling with a rising cost of living. With significant economic pressures on both consumers and the wider market, strategic adjustments will be essential to mitigate the impact of these financial strains.
