Food Inflation Could Reach 9% in UK Despite Strait of Hormuz Reopening
Food inflation in the UK could rise to 9% this year, even if the Strait of Hormuz reopens within the next few weeks, according to recent figures. The ongoing war in Iran is driving up energy prices, significantly impacting food costs.
The Food and Drink Federation (FDF), representing 12,000 food and drink manufacturers, has revised its forecast, predicting that prices will increase by "at least" 9% by the end of 2026. This figure nearly triples the previous estimate of 3.2% made before the conflict began.
Dr Liliana Danila, the chief economist at the FDF, highlighted the multiple pressures on the industry, including rising energy, transport, and packaging costs, alongside supply chain disruptions.
“The current situation is unprecedented and hard to predict,” she said. “Given the scale and speed of these cost increases, and despite companies’ best efforts not to pass price increases on, it’s clear that food inflation is going to rise in the months ahead.”
The 9% inflation forecast assumes that the key shipping channel through the Strait of Hormuz will reopen to cargo traffic within two to three weeks, and that major energy facilities such as oil, gas, and fertiliser sites will return to normal operations within a year.
Government Response and Industry Concerns
This warning coincides with Chancellor Rachel Reeves’ scheduled meetings on Wednesday afternoon with executives from major retailers including Sainsbury’s, Tesco, and Morrisons. The discussions will focus on the potential effects of the Middle East conflict on the cost of living and possible supply shortages.
UK farmers and producers have expressed concerns that without government intervention, shortages of domestic produce such as tomatoes, cucumbers, peppers, and aubergines could occur.
Many businesses, which have already faced significant challenges, are expected to encounter a sharp rise in costs starting Wednesday. While household energy bills are set to decrease until July, they are anticipated to rise thereafter.
The government is facing mounting pressure to provide support, though it has indicated that any assistance would be targeted at the most vulnerable households.
In an interview with the BBC, Chancellor Reeves stated the government is exploring support options based on household income.
“Looking at ways in which we can support people based on their household income,” Reeves said.
However, she refrained from committing to cuts in fuel duty or VAT on petrol, cautioning that excessive promises to reduce prices could inadvertently increase overall inflation, interest rates, and taxes.
