How drought could affect food supply, prices and inflation – and why building long-term resilience matters.
Drought is not expected to affect all categories equally, but it could increase risks to the cost, quality and availability of some products, particularly fresh produce. IGD’s Viewpoint: Food inflation forecasts 2026–28 identifies weather-related disruption as a key upside risk to the outlook. Our latest resilience research, Thriving in a volatile world, places this within a wider challenge: climate change, water availability and agricultural production are increasingly interconnected risks for the UK food system.
How does drought affect food production?
Prolonged dry weather can reduce crop yields and quality while constraining water available for irrigation and livestock. The exposure is greatest where production is water-intensive or reliant on vulnerable water supplies, including parts of the fresh produce sector. Lower marketable output can coincide with higher irrigation, feed and energy costs, increasing operational risks across affected supply chains. The wider challenge is water variability: capturing and storing surplus rainfall from wetter periods for use during dry growing seasons will become increasingly important.
Could there be food shortages?
Widespread shortages are not currently the most likely outcome. The effect will vary by crop, region and supply chain, as well as businesses’ ability to source from alternative regions or imports. For exposed categories, lower volumes, reduced quality or shorter periods of availability could nevertheless create temporary supply gaps and require changes to sourcing or specifications.
What could drought mean for food prices?
The clearest near-term effect is likely to be category-level volatility rather than an immediate, uniform rise in headline food inflation. Lower yields and quality can constrain supply, while additional water, energy, feed and sourcing costs can increase production costs. This creates upward price pressure, particularly in fresh produce and other categories exposed to agricultural and weather risks. The timing and scale of transmission will be uneven: contracts, inventories, imports and commercial pricing decisions can delay or absorb part of the effect, meaning drought may initially be visible through availability, quality or cost pressure.
Has IGD changed its food inflation forecast?
IGD has not revised its forecast specifically in response to recent drought conditions. IGD’s Viewpoint: Food inflation forecasts 2026–28 forecasts retail food and drink inflation of 3.3–4.3% in 2026, 3.1–4.1% in 2027 and 2.2–3.2% in the first half of 2028. Weather-related disruption remains an important upside risk alongside energy, geopolitical, labour, supply chain and policy pressures. The implications are likely to differ substantially by category, with produce among those most exposed to weather risk.
Why is this a longer-term resilience issue?
In IGD’s survey-based assessment of risks over the next five years, climate change, water and agriculture rank second, third and fourth respectively. The research finds that 91% of respondents to IGD’s Resilience survey – comprising industry leaders and academic experts – believe risk has increased over the past 12 months. Over the longer term, IGD considers climate change the greatest risk because it amplifies other pressures across the food system. Drought should therefore be viewed not as an isolated event, but as part of growing water volatility, including rapid shifts between flooding, wet winters and dry growing seasons.
Actions to consider
Assess exposure: identify the categories, sourcing regions and suppliers most exposed to drought and water constraints.
Engage suppliers: monitor crop conditions, yields, quality and emerging cost pressures.
Test scenarios: assess how disruption could affect availability, specifications, sourcing, pricing and investment decisions.
Build resilience: review sourcing options and the role of water efficiency, storage, winter abstraction and catchment-level collaboration in longer-term plans.
Review operational resilience: assess the impact of prolonged heat on refrigeration, cold-chain logistics and temperature-sensitive products. See our recent article Preparing the cold chain for a hotter future
In summary
Drought is unlikely to affect every category or supply chain equally, but it can compound existing cost and availability pressures in exposed parts of the market. Businesses should monitor crop conditions and water risks, engage closely with suppliers and assess how weather disruption could affect sourcing, specifications, pricing and investment decisions. Read IGD’s Viewpoint: Food inflation forecasts 2026–28 and Thriving in a volatile world for the wider outlook and resilience priorities.