Food prices expected to rise by 4.2% in second half of 2025

Experts say DEFRA must act, and invest in good food for all, while large food retailers should shoulder some of the burden to make healthy food affordable

The British Retail Consortium (BRC) has said there is "little hope of prices going anywhere but up" due to retailers facing higher national insurance (NI), National Living Wage and new packaging costs following the recent budget.

The latest BRC-NielsenIQ Shop Price Index spanned December 1^st to December 7^th 2024, including the final days of the Black Friday discounting period (inclusive of Cyber Monday).

Prices of products other than food were 2.4% cheaper in December, the greatest deflation since April 2021 (although this was impacted by later Black Friday discounting). Food prices overall were unchanged at 1.8% higher than a year ago, which is the lowest since November 2021, while fresh food inflation was unchanged at 1.2%.  Inflation on ambient food (products which can be stored at room temperature) rose slightly to 2.8% from 2.7% in November.

Helen Dickinson, CEO, BRC said that “With food inflation bottoming out at 1.8%, and many price pressures on the horizon, shop price deflation is likely to become a thing of the past." She added that prices are only likely to increase “as retailers battle the £7 billion of increased costs" in 2025, resulting from the budget.

“Modelling by the BRC and retail CFOs suggest food prices will rise by an average of 4.2% in the latter half of the year, while non-food will return firmly to inflation,” said Dickinson. “Government can still take steps to mitigate these price pressures, and it must ensure that its proposed reforms to business rates do not result in any stores paying more in rates than they do already.”

Timothy Lang, Emeritus Professor of Food Policy at City University London's Centre for Food Policy, believes that “the era of so-called cheap food” is probably over. He added, “But the driver of price rises today is political uncertainty, energy costs, long supply routes and Brexit effects. Meanwhile, for more and more consumers, food has to be cut back.”

He added that Defra must face up to the problem and recognise that investment in good food for everyone pays off in reduced ill-health. “The UK cannot keep ducking the new realities.” 

Dr Megan Blake, FRGS, Senior Lecturer in Human Geography, University of Sheffield, concurs that it is likely that prices will increase, but she is bothered by “the presumption that it should be workers and the public purse that should bear the burden.” 

“For too long, multinational food retailers and producers have benefitted from their workers’ labour. It is time that we asked these companies to foot some of the bill.”   

She cites multinational food corporations, some of whom do not pay a living wage, meaning a significant proportion of working people are not earning enough to feed their families. “People who struggle are also more likely to have health problems that are linked to not being able to eat a healthy diet. This puts pressure on the NHS. For too long, multinational food retailers and producers have benefitted from their workers’ labour. It is time that we asked these companies to foot some of the bill.”  

In January it was announced that a new consortium of academics, campaigners and analysts have come together to assess the impact that climate related extreme weather has had on UK food supplies, and to quantify the possible future impacts. The research project will run for two and a half years.

Pete Smith, Principal Investigator on the project and Professor of Soils and Global Change at the University of Aberdeen, said food shortages caused by climate change have driven spikes in food prices around the world, termed ‘climateflation’.

“This project examines the links between food prices and climate change, and will propose actions to deal with climateflation now and in the future."