Food Inflation Rises to 4.5% Amid Economic Challenges

Overview

Food and non-alcoholic drink inflation has increased to 4.5% in the year leading up to December 2025, marking an uptick from 4.2% in November. Monthly prices for these items saw a rise of 0.8% in December, contrasting with a 0.5% increase during the same month last year.

Industry Insights

Balwinder Dhoot, Director of Growth and Sustainability at the Food and Drink Federation (FDF), commented on the situation:

“After a challenging year for food and drink manufacturers, food inflation saw a further increase in December 2025. As costs rise across the board, it’s clear that households are feeling the squeeze, resulting in a subdued Christmas for the sector. The low UK consumer confidence, coupled with the prospect of continued geopolitical volatility, is concerning for food and drink manufacturers who face rising costs and tighter budgets themselves.”

“Tackling rising prices and food security is a priority for industry and government alike, and these challenges underscore the need for government to better incentivize investment and productivity growth in our sector. This will help protect the sector from future shocks and help manufacturers minimize price rises for consumers.”

Key Statistics

• Food and non-alcoholic beverage prices rose 4.5% in the year up to December 2025.
• Seven product categories saw price decreases, notably:
  • Olive oil: -13.8%
  • Flours: -6.5%
  • Sugar: -2.1%
• Price increases were most pronounced in:
  • Beef and veal: 27.2%
  • Chocolate: 15.5%
  • Whole milk: 14.6%
  • Coffee: 13.7%
• Between January 2020 and December 2025, input production costs, excluding labour and other regulatory expenses, surged 39.9% for UK food and drink manufacturers, slightly exceeding the 38.6% rise in food prices.
• In November 2025, 61% of adults in Great Britain reported an increase in their cost of living compared to the previous month, with 95% noting a rise in food shopping costs. Additionally, 39% stated they are cutting back on essential spending as a result.
• Food manufacturers faced new challenges, including an EPR packaging tax costing £1.1 billion and changes to National Insurance Contributions (NIC) costing £410 million, in addition to escalating ingredient prices.

Conclusion

As food inflation continues to rise, the impact on households and the overall economy becomes more pronounced. Manufacturers are calling for government support to navigate these turbulent times, emphasizing the necessity for enhanced investment and productivity strategies in the food sector.

Image: Pixabay