Food Inflation Could Treble by the End of 2026, FDF Warns
The Food and Drink Federation (FDF) has sharply revised its forecast for UK food inflation, warning that prices could rise to at least 9% by the end of 2026—more than triple its previous estimate.
The industry body, which represents around 12,000 UK food and drink manufacturers, had previously anticipated that inflation would ease to approximately 3% this year. However, escalating geopolitical tensions in the Middle East, including the effective closure of the Strait of Hormuz following the conflict involving Iran, have prompted a significant reassessment, with serious implications for operators across the hospitality and licensed trade.
Under its updated outlook, the FDF now expects food and non-alcoholic drink inflation to reach between 9% and 10% by December 2026, compared to its September 2025 forecast of 3.2%.
The revised figures are based on assumptions that cargo traffic through the Strait of Hormuz resumes within two to three weeks and that critical infrastructure—including oil, gas and fertiliser facilities—returns to normal operation within a year. However, the federation cautions that the situation remains highly volatile.
As one of the UK’s most energy-intensive sectors, food and drink manufacturing is particularly exposed to fluctuations in global oil and gas markets. Energy is a core cost at every stage of production, and while many medium and larger businesses mitigate volatility through fixed contracts, significant cost increases are expected as agreements expire.
Smaller producers, which are more likely to purchase energy on short-term or spot markets, are already experiencing acute price spikes.
Rising fuel costs are also driving up transportation expenses, while disruption to global shipping routes continues to impact delivery times and supply chain reliability—further compounding cost pressures for suppliers to the hospitality sector.
The crisis is also affecting UK exports, particularly to Middle Eastern markets. Shipments of key products such as cereals, chocolate, cheese and biscuits have been delayed or cancelled, creating additional uncertainty for manufacturers.
At the agricultural level, the impact is equally pronounced. The cost of red diesel—used extensively in farm machinery—has surged by around 80% since the onset of the conflict, with availability tightening in parts of the UK. Fertiliser supplies remain constrained, posing a particular challenge for livestock producers.
Crop growers, especially those reliant on energy-intensive greenhouse operations, are also facing escalating costs, which are likely to feed through into reduced supply and higher prices further along the chain.
Dr Liliana Danila, Chief Economist at the FDF, said the sector is already grappling with the scale of the disruption.
“The food and drink sector is already feeling the force of this geopolitical shock. As one of the UK’s energy intensive industries, manufacturers are facing mounting energy bills, rising transport and packaging costs and disruption across key supply chains. These pressures are hitting simultaneously, and are a significant challenge for businesses to absorb.
“The current situation is unprecedented and hard to predict. However, given the scale and speed of these cost increases, and despite companies’ best efforts not to pass price increases on, it’s clear that food inflation is going to rise in the months ahead.”
For hospitality and licensed trade operators already contending with tight margins, the revised outlook signals further cost pressures across food and drink procurement as the industry navigates an increasingly uncertain global landscape.