Food inflation eases — but industry warns of pressures
UK food and non‑alcoholic drink inflation eased to 3.3% in February 2026, down from 3.6% in January, according to the latest ONS figures.
Prices were flat month‑on‑month, offering a brief pause after several years of sustained increases. But industry bodies warn that the relief may be short‑lived as global instability continues to push up energy and logistics costs.
The headline figure masks sharp divergence across categories. Prices fell in nine areas, including olive oil (-10.4%), flours (-8.3%) and pizza (-4.9%). However, inflation accelerated significantly in key proteins, with beef and veal up 20.6%, offal up 17%, and whole milk up 13.1% year‑on‑year.
IGD: “Even in the best case, conflict prolongs the cost‑of‑living recovery”
New analysis from IGD suggests that the risks to food inflation are rising sharply due to the conflict in the Middle East, a region it describes as “a key energy‑producing region” whose disruption will directly affect food production because “oil and gas play critical roles at every stage” of the supply chain.
James Walton, chief economist at IGD, warned that even modest disruption could push inflation higher later this year. As he notes in IGD’s latest forecast: “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.”
Walton also highlighted that margins across the supply chain remain “exceptionally thin,” averaging just 1.5% across nine everyday food items, with some products such as chicken breast sold at cost. He warns that when margins are this tight, “businesses have limited capacity to absorb global shocks, invest in resilience or protect supply,” increasing the risk of future volatility.
FDF: “The calm before the storm”
The Food and Drink Federation echoed IGD’s concerns, warning that the sector is already feeling the impact of rising energy and transport costs.
Karen Betts, chief executive of the FDF, said: “While food inflation fell slightly in February 2026, I am concerned that this is the calm before the storm. The longer the conflict in the Middle East goes on, the bigger its impact will be on food prices.”
She added that heightened energy, maritime fuel and fertiliser costs are already feeding through the system. UK hauliers have introduced emergency fuel surcharges of up to 20%, while ocean freight lines have added emergency bunker surcharges of around $400 per container.
Betts warned that without targeted government support, the sector will struggle to absorb the cumulative shocks of the Iran conflict, the Ukraine war, regulatory realignment with the EU and new compliance burdens.
A fragile outlook
With global energy markets unsettled and supply chain costs rising, both IGD and the FDF caution that February’s easing may not signal a sustained downward trend.
IGD’s modelling shows that even in a no‑conflict baseline scenario, food inflation would still average 3.8% in 2026, requiring UK shoppers to find almost £10bn more to buy the same basket of goods.
As the situation in the Middle East evolves, the industry is preparing for a period of heightened uncertainty — and potentially renewed inflationary pressure in the months ahead.
