This upward trend is being driven by sluggish growth and persistent price pressures, and is expected to place further pressure on both households and businesses, the IGD (formerly the Institute of Grocery Distribution) said.
According to the latest Office for National Statistics data, the food and non-alcoholic drink annual inflation rate in the UK reached 4.4% during May, up from 3.4% in April. This 4.4% figure was the highest recorded rate since February 2024 when it was 5%.
The report also showed that food prices are now the primary concern for UK shoppers, moving ahead of worries about energy costs.
However, the IGD has projected that the food inflation rate will fall back to 1.8% by mid-2027.
“Amid economic uncertainty, shoppers are cautious with their finances, increasing private label purchases while reducing impulse and indulgence buys,” said Michael Freedman, head of economic and consumer insight at IGD.
“We identified only 29% of consumers plan to cut back on grocery spending, suggesting many have already tightened their budgets and have little room to cut back further.
“Instead, shoppers are more likely to look for savings on discretionary purchases like clothing and eating out, underscoring a clear prioritisation of food shopping over other categories. Businesses should adapt to shifting customer behaviours by offering value, convenience, and memorable experiences to attract customers and drive growth.”
According to new data collected by IGD, 83% of shoppers now expect escalating retail food prices, while 81% are similarly concerned about ‘away from home’ costs. This is reflected in the IGD Shopper Confidence Index, which fell two points to +1 in June.
Among lower income households, 41% expect their financial situation to worsen in the year ahead, while only 11% of high-income households share this concern. Overall, 25% of respondents believe their financial situation will get worse.
