Supermarket shoppers face rising costs as food inflation is expected to reach almost 4 per cent by Christmas before peaking at 6.4 per cent in July next year, industry leaders have warned.
According to the Food and Drink Federation (FDF), extreme weather and international conflict continue to hit supermarket shelves.
Although this year-end prediction is significantly lower than the 9 per cent forecast made in April, the trade body cautioned that inflation was set to remain significantly above historical averages through the second half of next year rather than dissipate.
Latest figures from the Office for National Statistics show a grocery shop costing £100 in January 2020 now stands at £138.60 – an increase of 38.6 per cent.
The FDF forecasts this bill will rise by a further £8.90, or 6.4 per cent, to £147.50 by July next year.
The trade organisation, representing 12,000 food and drink manufacturers, said “disruption is the new normal” due to geopolitical volatility, climate change impacts, and a “pile up” of regulatory expenses surrounding packaging and recycling reforms.
Urging the government to ease pressure, the FDF requested relief from rising energy and regulatory costs on manufacturers, warning “resilience is wearing thin”.
Its Food Inflation Forecast noted gas prices have more than doubled since February, UK electricity prices are among the highest in Europe, and UK diesel prices have risen by 28.6 per cent since the start of the conflict in the Middle East.
Meanwhile, climate-related events were compounding problems, with the cost of wheat up 45 per cent, cocoa more than 100 per cent, rice up 60 per cent and sugar and coffee up 27 per cent and 22 per cent respectively.
Droughts across the UK and Europe this summer have further strained supplies, meaning manufacturers would face higher costs for fruit, vegetables and grains in the months ahead.
FDF chief executive Karen Betts said: “Food and drink manufacturers have kept food prices as low as possible during the energy shock since the closure of the Strait of Hormuz but they can’t do this indefinitely.
“The persistently higher costs of energy, logistics and packaging, compounded by this summer’s extreme heat mean that food prices will rise this year, and we believe that rise will be sustained into 2027.
“As the Prime Minister has recognised, households need some breathing space. Tackling the rising costs of food production will help with the cost of living, as well as giving businesses the confidence they need to invest in a resilient food system.”
Last week, the National Audit Office warned that the government must work more closely with households, communities and industry to ensure the food supply chain can withstand increasingly likely and severe shocks including extreme weather events, cyber-attacks and disease outbreaks.
Environment secretary Dame Angela Eagle later suggested households stock up on food to prepare for extreme weather, telling the Guardian that El Nino will lead to “more extreme storms in this country”.
A Department for Environment, Food and Rural Affairs (Defra) spokeswoman said: “The prime minister has made clear that food security is national security and we are working with farmers and the food and drink industry to strengthen the UK’s resilience.
“We know that many households are still feeling pressure from the cost of living which is why we are taking a range of actions to keep prices down, including suspending import tariffs on everyday goods and supporting farmers hit by the recent drought.”
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