The Institute of Grocery Distribution has more than doubled its forecast for food inflation this year, from 3.6% to over 8% by June
The Middle East crisis could add more than £150 a year to the average family’s grocery bill, experts have warned.
The Institute of Grocery Distribution has more than doubled its forecast for food inflation this year, from 3.6% to over 8% by June.
The predicted surge would prove another massive blow for millions of families as the weekly shop is already one of the biggest outgoings for many.
It comes on top of a previous surge in food prices which has already hammered household budgets. According to the IGD, food prices in shops have rocketed by around 38% since before the Covid pandemic.
Its latest warning is yet another sign of what critics have dubbed “Trumpflation”, given the impact of US President Donald Trump and Israel’s war on Iran.
A leap in oil prices and the effective blockage of the Strait of Hormuz by Iran is expected to filter through to food costs, along with many other bills for ordinary people.
James Walton, chief economist at the IGD, said: “Even in the best case scenario, the conflict in the Middle East is likely to prolong the timeline for recovery from the cost of living crisis.
“If the energy shock is more severe, food inflation could reach over 8% by June 2026 versus 3.6% now, which would add over £150 onto the average household grocery bill per year.”
He added: “Persistently high food prices continue to fuel concern over excess profits, based on the assumption that higher prices must mean higher profits for food businesses.
“Our Food Pound analysis shows that the evidence points in the opposite direction: margins for basic food and drink remain exceptionally thin, and in many cases have fallen in recent years.
“For example, margins on nine everyday food items average just 1.5% across the supply chain, with items such as chicken breast sold at cost and beef mince generating under 1% margin.”
Food inflation peaked at more than 19% in March 2023, amid the fall-out from Russia’s full-scale invasion of Ukraine.
It has eased considerably since, falling to 3.6% in January this year, according to the Office for National Statistics. The ONS will release data for inflation in February on Wednesday.
The Iran war is expected to drive inflation – currently 3% – higher in the months ahead because of a sharp rise in energy costs. The Bank of England has forecast inflation could reach hit 3.5% in the months ahead.
