Middle East briefing: Conflict reshaping consumer expectations

The Middle East conflict has affected consumers primarily through energy costs and shifting inflation expectations, raising the risk of a confidence shock that accelerates value-seeking even before any renewed price rises are fully visible on shelf.

Ceasefire update (April 2026): The announcement of a two-week ceasefire has eased immediate fears of further escalation and has driven some relief in energy markets. However, a short ceasefire is too brief to remove the risk of higher costs feeding through later in 2026: prices remain above pre-conflict levels, volatility can return quickly, and cost pass-through to food is typically lagged.

Below, we set out six ways the conflict is already reshaping consumer expectations and behaviour, before closing with the key implications for retailers and manufacturers.

This briefing revisits our consumer predictions from the IGD Viewpoint report What to plan for in 2026, setting out what has changed as a result of the Middle East conflict and what this means for the food system.

In December, we did not predict this specific escalation or any particular scenario (for example, a direct US/Israel/Iran confrontation or disruption to the Persian Gulf); rather, we highlighted the likelihood of ongoing instability and the risk that fresh shocks could re-ignite energy costs, inflation expectations and confidence. The key point is that the risk is not just higher prices, but a return of cost-of-living anxiety that can lead households to tighten budgets sooner, and more sharply, than expected.

Why the Middle East conflict matters for UK consumers

The conflict impacts UK consumers mainly through energy and freight costs, and, critically, through expectations and confidence (which can shift quickly even if prices later ease).

Disruption and risk in a key energy-producing region raises the price, and volatility, of oil and gas, while shipping constraints through strategic routes and higher insurance costs add pressure to freight and wider input costs. For food, energy is not just a household bill: it is an input into fertiliser, glasshouses, manufacturing, packaging and logistics. The result is higher inflation risk, weaker growth, and, crucially for consumers, rising expectations of future price increases, which is depressing confidence and can trigger earlier value-seeking behaviours.

1) Confidence remains fragile and easily shaken

We predicted: Confidence would stay muted and could deteriorate quickly if households saw signs of renewed pressure (for example, via an external shock that lifts energy costs and inflation expectations).

What’s happened since: Confidence has deteriorated quickly as the conflict has brought energy and inflation back to the top of the agenda. IGD’s Shopper Confidence Index has dropped to -4 (from 1 in February), the lowest level since August 2023.

In parallel, consumers are more likely to believe the cost of living will worsen again, echoing the pattern we have highlighted in recent IGD Middle East briefings: shocks transmit through expectations and sentiment before they fully show up in official inflation data.

What this means: Behaviour changes can arrive earlier than the shelf. Plan for faster shifts into value-seeking, even if headline food inflation stays relatively moderate.

What next for shopper confidence?

Expectations are that the conflict will keep inflation risks elevated, with ongoing uncertainty around household energy bills, food prices and interest rates over the months ahead. The announcement of a two-week ceasefire reduces the likelihood of near-term escalation and has brought some easing in energy prices, but it does not remove the risk of renewed volatility or of lagged cost pass-through later in 2026. The extent to which confidence is affected will depend on whether de-escalation holds, how quickly risk premiums in energy and freight unwind, and the severity (and timing) of any cost pass-through into household budgets.

It is worth remembering how quickly sentiment can deteriorate when these pressures build. After the Ukraine crisis began, IGD’s Shopper Confidence Index fell to -20 in August 2022 as households anticipated a prolonged squeeze.

One watch-out within this is trust in the food industry to keep food prices low. This fell to 24% at the worst point in 2022, but now stands at 48%. That recovery matters, and it will be important to keep tracking it. Our Food Pound research shows that across a basket of nine everyday products, there is very little margin across the supply chain. Higher prices have largely reflected higher costs, not inflated profits.

This context is critical. When shopper confidence falls, perceptions harden quickly. That’s why it’s so important to keep tracking both confidence and trust, alongside the realities of food margins.

2) Energy and fuel costs reset inflation expectations

We predicted: Energy and petrol would act as the first visible signal that prompts households to tighten budgets, particularly if renewed instability kept markets volatile.

What’s happened since: The conflict has pushed energy and petrol back into focus, and shoppers have increasingly assumed food prices will follow. While the two-week ceasefire has brought some short-term relief in energy markets, the episode has already reintroduced volatility and left prices higher than before the conflict began. Petrol prices remain materially higher at the pump than pre-conflict levels, reinforcing the sense that the inflation story is not over.

This has fed directly into expectations: 80% now expect food prices to rise over the next 12 months (up from 72% in February). As set out in IGD’s recent analysis of oil and gas prices and our Middle East inflation briefings, the key risk is not a single-day spike in crude, but sustained elevation and volatility, because that is when hedges roll off, contracts reset, and cost pass-through becomes more likely.

What this means: The conflict matters most through an energy and freight costs feeding into expectations and then confidence chain. Even if some energy moves prove temporary, disruption to routes and higher risk premia (including insurance) can keep costs elevated long enough to change pricing assumptions. The flashback effect can be as important for behaviour as the actual inflation number.

Taken together, this means the next phase of pressure is likely to be felt less as a sudden price shock and more as a renewed drag on household living standards.

Updated food inflation outlook: IGD’s baseline outlook (set before the latest escalation) assumed food and drink retail inflation averaging 3.3–4.3% in 2026 (around 3.8% most likely). Our latest scenario analysis shows how an energy shock linked to the conflict could lift that path: a short, moderate shock could take average inflation to around 4.8%, while a short, intense shock could push average inflation to around 6.4% and briefly take food inflation above 8% during 2026. The two-week ceasefire reduces the likelihood of the most severe near-term outcomes, but it is too short and uncertain to justify a material forecast reset – see Middle East ceasefire: impact on food inflation forecasts; the more realistic impact is on risk and timing (how quickly pressure shows up), rather than removing the underlying exposure of food inflation to energy, freight and confidence channels. A higher inflation pulse would also weigh on growth. That backdrop has shifted interest-rate expectations: instead of a smooth path to lower rates, markets and commentators increasingly expect fewer cuts from the Bank of England, and some now see a risk of rate rises if inflation proves persistent.

Where consumers can already see prices rising vs where rises are still to come: The first effects are most visible in oil-exposed categories, with petrol and diesel already rising at the pump and transport costs increasing as fuel-driven operating costs feed through. We are also seeing early signs in selected food categories where logistics, fertiliser and other inputs are edging up. The next wave is more likely to appear with a lag, as gas and electricity bills reset (driven by price-cap and contract timing), heating oil moves (often uncapped and more directly oil-linked), and broader food inflation builds as higher costs work through manufacturing, packaging and the supply chain, alongside wider inflation-linked bills as second-round effects feed into indexed prices and services.

3) The squeeze is increasingly about living standards, not just inflation

We predicted: Many households would see limited improvement in living standards, with a rising tax burden and persistent cost pressures keeping people cautious.

What’s happened since: Expectations have shifted towards higher prices and a weaker economy. As energy-driven inflation risks rise, the likelihood of a softer growth backdrop increases, raising concern about how quickly living standards can recover and increasing the risk of a more stagflationary mix. In our consumer tracking, more shoppers now expect to be worse off in the year ahead: 37% in March (from 25% in February), with the impact felt most by low- and middle-income groups.

What this means: Growth remains fragile. Recovery assumptions (especially for discretionary and premium) need stress-testing, and value messages must feel credible for squeezed households.

4) Coping behaviours persist, but headroom is thinner

We predicted: Shoppers would keep using familiar coping strategies, but many had already reined it in, limiting how much further they can go.

What’s happened since: As confidence has softened and expectations of further price rises have increased, shoppers look increasingly primed to repeat proven playbooks rather than experiment. That typically means more active range navigation (switching tiers, formats and pack sizes), higher deal engagement, and a greater willingness to trade time for money (shopping around, visiting multiple retailers, and leaning harder on discounters).

What this means: Expect more of the same (promotions, switching, range navigation) but with greater risk of tougher trade-offs (simpler baskets, fewer treats) where budgets are already maximised.

As these coping behaviours become the default again, the battleground shifts from whether shoppers use deals to how promotions shape trust and value perception.

5) Promotional intensity stays high, but returns may diminish

We predicted: Promotional activity would remain elevated, but incremental volume gains would be harder to win because shoppers are already highly deal-literate.

What’s happened since: In an environment where energy headlines are back and shoppers are bracing for renewed pressure, promotions remain central to value perception. But deal mechanics can also add to confusion and mistrust if they feel inconsistent or hard to compare. With expectations of price rises increasing, promotional sensitivity is likely to stay high, particularly among low-to middle-income consumers.

What this means: Winning value perception will rely more on clarity, simplicity and trust than on depth of discount alone.

6) Healthy and fresh choices become more vulnerable under renewed pressure

We predicted: Renewed cost pressure would increase the risk of households trading away from fresh and healthier choices.

What’s happened since: The confidence shift and rising price expectations point to renewed budget discipline, concentrated among low- and middle-income groups. If higher energy costs persist and interest rates stay higher for longer (or rise), households have less flexibility, raising the risk that consumers protect the overall basket by trading away from fresh, healthier or higher-welfare choices first.

What this means: There is a heightened need for affordable healthy value cues (price-locked staples, accessible fresh) to prevent nutrition outcomes worsening as consumers prioritise affordability.

Implications for retailers and manufacturers

• Stay on top of fast-moving shopper trends (using IGD ShopperVista): this is a crucial period where behaviour can turn quickly. Use frequent shopper tracking alongside leading indicators (fuel prices, inflation expectations, confidence and trust in the industry to keep prices low) to anticipate shifts ahead of official inflation and wage data.

• Maintain moral authority on price: demonstrate fairness and transparency to avoid any perception of profiteering, and use proof points (including IGD’s Food Pound research, which shows limited margin in a basket of nine products) to build confidence that the system is working to protect affordability.

• Plan for heightened promotional sensitivity, but focus on effectiveness (clarity and relevance) as well as depth of discount.

• Protect affordable healthy choices with visible cues (price locks, staples, accessible fresh) to reduce the risk of shoppers trading down nutritionally.