The figures, released by the Office for National Statistics (ONS) this morning (17 June), show that the rate of increase in food and drink prices has slowed to a 17-month low.
Reacting to the news, both the Institute of Grocery Distribution (IGD) and Food and Drink Federation (FDF) have warned that the true inflationary impact from the Iran conflict has yet to be reflected in the data.
Both organisations say they expect the supply chain instability caused by the conflict to be seen in the second half of 2026.
Cautioning that its negative knock-on effects could last through to 2028, IGD says that while food inflation is no longer expected to peak as high as in a severe energy shock scenario, families with children will still need to find around £203 extra for food and drink this year, as well as another £207 for next year, compared with current price levels.
IGD forecasts food inflation to peak at 5.5% in the second half of 2026, averaging 3.7% to 4.7% across the year.
IGD chief economist James Walton adds that although a peace deal has been announced by the US and Iran, the impact on food inflation is still feeding through with a time lag, meaning geopolitical, energy and supply chain pressures are overlapping.
Echoing this view, Karen Betts, chief executive of the FDF, said: “It’s good to see an easing of food inflation in May, but consumer prices still don’t reflect the inflation caused by the closure of the Strait of Hormuz.
“It generally takes several months for the increased costs paid by farmers, processors and manufacturers to filter into raised prices at the tills, not least because of the widespread use of long-term contracts for energy and ingredients. But manufacturer input costs are rising, including for transport, packaging and energy, and we expect food inflation to pick up this year and into next.”
She continued: “Uncertainty is the new norm for food producers, which is driving up the overall cost of food production. This makes it all the more important that government acts where it can – to prioritise food manufacturers for energy support and by prioritising and rationalising regulation, freeing businesses to invest in vital long-term resilience.”
