Bulletin: Food inflation and market outlook

Inflation challenge is now persistence, not the peak 

The biggest food inflation risk is no longer how high prices rise, but how long cost pressures remain embedded in the food system. Businesses face an extended period of pressure from labour, regulation, energy markets, climate risks and supply chain disruption. 

• Cost pressures expected to remain a feature of the market into 2028. 

• Labour, policy and weather risks continue to build. 

• Supply chain pressures are beginning to re-emerge. 

• Meat and produce remain among the most exposed categories. 

• Businesses should focus on resilience, sourcing flexibility and long-term planning. 

See our article: Food inflation: lower peak, longer pressure 

Growth without recovery 

IGD's latest forecasts show the UK grocery market reaching £303.7bn by 2031, but growth is expected to be driven more by inflation, population growth and pricing than stronger consumer demand. Shopper caution and changing purchasing habits will make growth harder won, increasing competition across the market. 

• UK grocery market forecast to reach £303.7bn by 2031. 

• Online expected to be the fastest-growing channel. 

• Discount continues to gain share as value remains important. 

• Supermarkets remain dominant but face intensifying competition. 

• Success will depend on winning share rather than relying on market growth. 

See our article: UK grocery outlook to 2031: trends & growth | IGD Retail Analysis 

Oil risk premium eases as Hormuz traffic improves 

Oil prices have eased as markets price in a lower risk of sustained disruption to Middle East supply. Official data points to continued constraints on flows through the Strait of Hormuz, a critical route for around a quarter of global maritime traded oil. Recent indicators suggest oil flows have been significantly below last year’s levels, while vessel movements remain disrupted and are being managed gradually.  

IGD opinion 

For food and grocery businesses, lower oil prices may ease fuel, freight and energy-linked costs, but risks remain if disruption returns. 

Farming roadmap sets direction to 2050 

The government has published its Farming Roadmap 2050, setting out a long-term plan for a profitable, productive, sustainable and resilient farming sector. The roadmap aims to give farmers greater confidence to invest and adapt, while bringing together existing policies and future commitments in a single framework. 

• Long-term vision for farming to 2050. 

• Greater certainty for investment and business planning. 

• Support for innovation, technology and skills. 

• Action to improve climate, water and supply-chain resilience. 

• New growth plans for sectors including horticulture and poultry. 

• Timeline of key policy actions and environmental targets to 2030. 

IGD opinion 

The roadmap provides greater visibility over the future direction of farming policy, helping food and grocery businesses assess long-term implications for food production, sustainability, investment and supply chain resilience.