UK Food Inflation Expected to Peak at 5.1% in 2025, Raising Consumer Concern

The Institute of Grocery Distribution (IGD) projects that UK retail food inflation will peak at 5.1% in late summer 2025, significantly exceeding general inflation and placing considerable strain on households and businesses amid sluggish economic growth. Food prices have surpassed energy costs as the primary concern for UK consumers, with 83% expecting further price increases and 81% worried about away-from-home expenses. Consumer confidence remains fragile, as reflected by a dip in the IGD Shopper Confidence Index and widespread anticipation of tax hikes, leading many shoppers to prioritize food spending while cutting back on discretionary purchases like clothing and dining out. Despite these challenges, only 29% of consumers plan to reduce grocery spending, indicating many have already tightened their budgets with limited room for further cuts. The financial outlook shows growing disparity, with 41% of lower-income households expecting their situation to worsen compared to just 11% of higher earners. Looking ahead, IGD forecasts a gradual decline in food inflation to 1.8% by mid-2027 but warns that ongoing inflationary pressures will be driven by regulatory costs, extreme weather, and global commodity volatility, urging businesses to adapt by offering value, convenience, and innovative experiences to meet shifting consumer behaviors.