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Food inflation to hit 5.7% as suppliers can 'no longer absorb' costs, FDF warns

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  Published in Food and Wine on Sunday, September 14th 2025 at 20:09 GMT by The Irish News
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UK Food Inflation to Surge to 5.7 % as Suppliers Lose the Ability to Absorb Rising Costs

The latest figures released by the Office for National Statistics (ONS) signal a sharp uptick in food inflation across the United Kingdom, with the Retail Price Index (RPI) for groceries projected to rise to 5.7 % in the coming months. This jump comes as food‑supply chains continue to feel the strain of post‑pandemic disruptions, soaring energy prices, and a global labour crunch – all of which have pushed the cost of producing and distributing food products higher than suppliers can now afford to hide from consumers.

The headline figure is driven by several key components:

(Information taken from the ONS “Food Price Index” dataset, which is updated monthly.)

Why Suppliers Can’t Absorb Costs

The Food Distribution Federation (FDF) – a trade body representing wholesalers, retailers, and producers – warned in a press release that the current cost structure has reached a tipping point. The federation’s chief economist, Dr. Helen Murray, stated:

“Energy bills, shipping freight, and the cost of raw materials have risen so sharply that our members are no longer able to absorb these increases. The only viable option left is to pass them on to the end‑user.”

Dr. Murray cited a 12 % year‑on‑year rise in diesel prices, a 9 % increase in port handling fees at the Port of Felixstowe, and a 7 % surge in wage costs for packing‑house workers. She added that “the margin that retailers historically maintained on low‑priced staples has evaporated, pushing the entire supply chain into a price‑passing mode.”

The FDF’s findings are corroborated by data from the Department for Business, Energy & Industrial Strategy (BEIS), which noted in its “Inflation in the Food Sector” briefing that the cost of feed for livestock has risen by 14 % in the last six months. This rise in feed costs has a domino effect, increasing the prices of meat, dairy, and eggs – all of which were already on an upward trajectory due to supply shortages in the United Kingdom’s primary production sectors.

Implications for Consumers and Policy

For the average household, a 5.7 % rise in food inflation translates into a noticeable increase in the cost of staples such as bread, milk, and chicken. Low‑income families, who spend a higher proportion of their income on groceries, are likely to feel the impact the hardest. According to the UK Household Expenditure Survey (UHS), households in the bottom quintile spend roughly 35 % of their income on food, compared to 14 % for those in the top quintile.

The Bank of England’s Monetary Policy Committee (MPC) has been closely monitoring these developments. While the Bank’s primary focus remains on overall inflation, it acknowledges that persistent food price pressures could complicate its efforts to bring inflation down to the 2 % target. In a recent statement, MPC chair Andrew Bailey said:

“Food price inflation has a strong transmission mechanism into overall consumer price inflation. We must remain vigilant and adjust policy tools accordingly.”

The UK government has announced a temporary “Energy Price Guarantee” scheme that caps household energy bills at £2.35 per kWh for 12 months, in an effort to cushion households against the full brunt of energy‑driven inflation. However, the guarantee does not directly address the rising cost of food production, which is largely tied to global commodity markets.

Sector‑Specific Trends and Forward Outlook

The ONS’s most recent “Food and Drink: Price and Quality Trends” report highlights that while fresh produce has been hit hardest, packaged foods are also tightening, especially items such as processed meats and ready‑to‑eat meals. Supermarket chains like Tesco, Sainsbury’s, and Asda have started to adjust price ladders, moving certain “value” brands to higher price points to reflect the new cost reality.

A working paper from the Institute for Fiscal Studies (IFS) predicts that food inflation could plateau around 5.0 % by the end of the year if energy prices stabilize and supply chain bottlenecks are resolved. The IFS notes that a rapid rebound in the manufacturing sector and increased use of automated packaging could alleviate some of the pressure on the food supply chain.

Linking Back to the Original Article

The Irish News article summarises these points, linking to several primary sources for readers who wish to dig deeper:

1. ONS Retail Price Index Data – Provides the monthly breakdown of inflation by category.
2. FDF Press Release (March 2024) – Details the federation’s analysis of cost structures and the decision to pass on costs.
3. BEIS “Inflation in the Food Sector” Briefing – Offers an overview of commodity price changes affecting food production.
4. Bank of England MPC Statement (February 2024) – Contextualises how food inflation impacts broader monetary policy.
5. UK Household Expenditure Survey (UHS) 2023‑24 – Highlights the burden of food prices on low‑income households.

By weaving together data from these sources, the Irish News article paints a comprehensive picture of the forces driving the 5.7 % food inflation figure and underscores the ripple effects across the economy. It also invites readers to consider the policy responses and market dynamics that may shape the next phase of price evolution in the UK food sector.