An industry body says the cost of the weekly shop is likely to rise for millions of UK families even if the Middle East conflict is resolved soon
Food prices could surge by 10% this year, even if the Middle East conflict is resolved soon, industry chiefs have warned.
Trade body the Food and Drink Federation has hiked its forecast for how much it thinks food and drink prices will rise this year from 3.2% to between 9% and 10%.
That is based on the assumption that the key Strait of Hormuz will open within three weeks and energy production in the Middle East returns to normal within a year.
The FDF, which represents 12,000 food and drink manufacturers, has significantly revised its forecasts from those it had in September last year.
The shift has been caused by the effective closure of the Strait and disruption and damage to energy infrastructure in the region since the war between US and Israel and Iran began at the end of February.
The conflict has sent Brent crude oil and natural gas prices skyrocketing to their highest level since 2022.
Disruption to oil and gas markets is having a direct and immediate impact on production costs for UK food and drink manufacturers, the FDF said, because it is an industry that requires a lot of energy for the manufacturing process.
Many larger businesses are able to “hedge” costs by fixing energy contracts, but they are preparing for sharp price rises when contracts end, according to the FDF.
Meanwhile, it said smaller producers tend to buy energy “on the spot” and were already experiencing higher prices.
Dr Liliana Danila, FDF’s chief economist, said: “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.”
She added: “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.”
Chris Jaccarini, food and farming analyst at the Energy and Climate Intelligence Unit, said: “Forecasts that food inflation will approach double digits is deeply concerning. The war in the Middle East underlines just how quickly our dependence on fossil fuels can cost us.
“Petrol prices have risen sharply, and businesses are already reporting higher costs for energy, transport, fertiliser and other inputs. While oil and gas companies’ profits will likely rise, families will foot the bill through higher shopping and energy bills.“When Russia’s invasion of Ukraine triggered a fossil fuel crisis, it helped drive a sharp rise in food prices. Across 2022 and 2023, households ended up paying around £600 more for food, with climate impacts on food production also adding to those costs. With wages still not having caught up, food remains less affordable for many families than it was before
“With scientists warning that El Niño could return sooner than expected and intensify the extreme heat that climate change is already driving around the world, food production is in jeopardy. 2026 is shaping up to be another year in which conflict and climate risks become a costly reality.”
