Food inflation eases but risks remain
18 February 2026Lower food price inflation is good news – but the fix is not yet in.
What’s happening?
ONS data shows that “all items” inflation in the UK was 3.0% year-on-year in January 2026, as measured by the CPI method. This is a step-down from the 3.4% seen in December, which will be welcome to many.
3.0% is still well above the government’s target rate, but OBR forecasts suggest that “all items” inflation will slow gradually, over the course of 2026.
Food and drink inflation slowed, falling from 4.5% in December to 3.6% in January. This decline was sharper than IGD forecasts - food and drink was a key contributor to the fall in overall inflation.
Why caution is still needed
Lower inflation will offer some relief to households, but there is a lot of work to do before prices are stabilised and the cost of living falls. There are several reasons to be cautious on inflation.
Volatility hasn’t gone away
Food inflation is heavily influenced by energy and commodity markets, which remain unpredictable. One month of data does not signal a sustained downward trend.
Prices are still rising in most categories
Only oils and fats are currently seeing price falls. Elsewhere, prices continue to rise, just at a slower pace.
New costs hit businesses this spring
From April, many food businesses will face higher costs from changes to the National Living Wage, Business Rates, and the rollout of the Employment Rights Act.More cost pressure later in the year
In October, Extended Producer Responsibility (EPR) moves into its second year, increasing compliance costs for parts of the food supply chain.Structural weaknesses persist
The underlying driver of food price volatility is limited and fragile domestic supply. Without investment and reform, inflation risks will remain elevated. IGD has made recommendations for how domestic supply of poultry, fruit and vegetables could be expanded.Weather adds another uncertainty
Exceptionally wet weather in early 2026 could disrupt UK farming, potentially adding to price pressures later in the year. Historically, wet weather has disrupted farming activity by flooding fields and making it hard for machines to operate.
What this means
Slower food inflation is good news – but it is not yet secure. Until supply‑side constraints are addressed and cost pressures ease, food prices will remain vulnerable to renewed inflation.