Bulletin: Little Christmas cheer for food shoppers

The latest IGD research reveals:

• Half of UK adults expect to be worse off financially in the next 12 months due to the 2025 Budget

• Only 1 in 10 feel they’ll be better off

• Financial confidence is low across all income groups

• 49% expect to visit cafes, restaurants, or pubs less often in the next year due to the Budget measures

See our latest article: Budget and food inflation: A leaner Christmas ahead?

IGD opinion

The challenge for 2026 is changing shape. While retail food inflation is expected to slow down slightly, a new squeeze will come from higher taxation. This shift is likely to stifle consumer demand and slow growth, as households tighten budgets beyond food prices. For the food industry, expect continued pressure on volumes and a stronger focus on value as consumers adjust to a new cost landscape.

Soft drinks industry levy to lower sugar threshold and cover dairy

The Government has expanded the soft drinks industry levy to cover dairy and substitutes, and has cut the sugar threshold from 2028, signalling the next phase of UK sugar reduction policy.

See our article: SDIL to lower sugar threshold and cover dairy

COP30 highlights: transforming food systems

COP30 in Belém, Brazil, set a bold agenda for agrifood systems, emphasising resilience, sustainability, and equity. Agriculture and food systems, responsible for a third of global emissions, face mounting climate risks. Finance emerged as the biggest barrier, with only 4% of climate-related development funds reaching agrifood sectors.

COP30 called for scaling investment through public-private partnerships and nature-positive solutions. The conference reinforced the interdependence of food systems and ecosystems, launching initiatives like the Cali Fund to drive biodiversity goals and climate-smart agriculture.

See our article COP30: Key takeaways for agrifood systems.

UK urged to act on climate resilience

The Council for Science and Technology has written to the Prime Minister warning that climate adaptation must become a cross-government priority. The letter highlights growing risks from flooding, with 6.3 million properties at risk, and warns of an 8% GDP hit in a near 3°C scenario.

Recommendations include setting measurable adaptation targets for all departments, supporting Defra’s coordination work, and integrating climate risk into major policies. The CST argues that strong domestic action will protect growth, security, and wellbeing while positioning the UK as a global leader on resilience.

Download Viewpoint report: Driving growth through a thriving food system

Download A climate risk assessment of the UK food system

Child poverty measures

The Government has announced new measures to ease the cost of living and support families as part of its upcoming Child Poverty Strategy. Changes include clearer guidance on infant formula pricing and allowing parents to use loyalty points, vouchers, and gift cards, saving up to £500 a year. The move follows a Competition and Markets Authority review and aims to help lower-income households while ensuring babies receive proper nutrition.

OECD Outlook: UK faces prolonged weak growth and inflation risks

The OECD warns the UK economy will remain under pressure despite a gradual recovery. After earlier stagnation, GDP is forecast to grow by 1.4% in 2025, 1.2% in 2026 and 1.3% in 2027. Inflation is easing but core price pressures persist, requiring tight monetary policy.

The report states that “Fiscal consolidation will be a headwind to the economy, with past tax and spending adjustments weighing on household disposable income and slowing consumption.”

It also highlights risks from energy subsidies and calls for targeted measures to protect vulnerable households.