Bulletin: Cost shock meets weak demand

Middle East briefing 

Conflict impacting pricing, negotiations, and increasing commercial tension 

Escalation in the Middle East is lifting food inflation expectations by increasing uncertainty around supply, logistics and energy-linked costs, making pricing and negotiations more difficult.  

IGD expects food inflation to remain elevated, with upside risk if energy disruption persists; in a severe but short-lived shock, inflation could briefly rise above 8% by June 2026. With consumers still value-focused, cost pass-through becomes the battleground, driving tougher talks on trade terms, promo funding, and timing 

See our latest article, Middle East Briefing: pricing, negotiations, and commercial tensions.

IGD opinion 

Volatility is raising the temperature in grocery negotiations. Even before costs hit shelves, renewed inflation fears make retailers more defensive and suppliers more insistent—so trust and proof matter as much as price maths. 

Global oil price surge persists 

A renewed global oil price spike is keeping UK cost pressures elevated, raising the risk of further pump-price increases and knock-on food inflation. 

Brent crude oil reached a three-week peak of about US$125/bbl on Thursday despite attempts at ongoing peace talks and a near cessation of conflict.  

The Prime Minister has chaired a meeting of the Middle East Response Committee (an offshoot of the Cabinet), discussing the economic impact of the war in the Persian Gulf. 

Separately, Darren Jones MP, Chief Secretary to the Prime Minister, has given an interview with the BBC, in which he suggested that economic and commercial disruption might last around eight months after the war ends. 

He offered reassurance that the government is monitoring the situation and taking steps to minimise impacts for UK households. He suggested that food shoppers are likely to experience price pressure, rather than empty shelves. 

IGD opinion 

War and disruption have already been going on for two months at time of writing. If the situation were resolved at once and “business-as-usual” restored, a further eight months of disruption suggests an event lasting for close to a year in total.  

Government thinking is apparently fairly aligned to IGD’s view, seeing the war in the Middle East primarily as a modest, but persistent, inflation event, rather than an availability crisis.  

However, pricing dictates food availability to shoppers as much as stock levels – when food is expensive, shoppers are forced to make tough spending decisions, and many will encounter real hardship.  

Food and drink’s talent gap: Act now 

Skills shortages in food and drink are shifting from an operational headache to a real drag on growth and resilience, longer vacancy times, persistent gaps, and an ageing workforce are already impacting productivity and service levels across the supply chain.  

That’s why IGD is calling on businesses to act now through Feeding Britain’s Future: a practical, scalable way to connect employers with schools and young people, widen the talent pipeline and improve work-readiness.  

Get involved by offering work experience, volunteering for school workshops, or mobilising your teams to champion careers in the sector through IGD campaigns. 

Email feedingbritain'[email protected] by 25 May 2026 to join the movement. 

See our latest article, Food and drink’s talent gap: Act now.

Life expectancy gap widens 

New annual ONS data shows that the gap in healthy life expectancy (HLE) between the most deprived and least deprived areas has widened. The Health Foundation has built on this data, showing of twenty-one high-income countries, the UK has fallen from 14th to 20th – only the United States now has a lower healthy life expectancy.  

The report also showed stark geographical differences in HLE between areas – HLE in affluent Richmond (London) was sixty-nine for men and seventy for women, compared with poorer Blackpool, where HLE was 51 years for both sexes.  

IGD opinion 

IGD have a new ‘Obesity crisis’ report, which summarises data from across the food system to show the scale and urgency behind the obesity challenge facing the UK.  

Poor health makes it more likely that workers will drop out of the labour force before reaching retirement age, becoming “inactive.” This means making the switch from being an economically productive taxpayer to being a tax “taker,” receiving funds via benefits and healthcare. A key stat from the new IGD puts this poor health into greater context: obesity costs businesses and the economy up to £23.8 billion per year through reduced productivity, absenteeism, and mortality.

This is a huge challenge to government, at a time when public finances are already fragile. We should anticipate that government will redouble its efforts to improve diet and other lifestyle factors – by legal means if necessary.

Even without government intervention, it is evident that there is an opportunity for food and drink businesses to address a significant public health issue by helping shoppers to move towards better diets and longer healthier lives.