Food and non-alcoholic beverage inflation fell to 1.3% in the year to July, down from 1.7% in June, according to the Office for National Statistics (ONS). The rate was the lowest since September 2021, while prices in the category were broadly unchanged month-on-month.
The easing came as headline UK CPI inflation increased to 2.9% in July from 2.6% in June. The rise was driven in part by higher household energy costs, underlining the different pressures facing household budgets despite a moderation in food-price growth.
Dr Liliana Danila, Chief Economist at the Food and Drink Federation (FDF), said the decline was positive for consumers, particularly given the supply-chain disruption associated with the war in Iran.
“It’s good news for consumers as food inflation continued to fall for another month in July,” she said.
“This isn’t what we’d historically expect to see following a supply chain shock like the war in Iran. This is partly due to the time it takes for these shocks to pass through to consumer prices and partly due to the fact that food manufacturers have learnt from the previous energy shock brought on by the war in Ukraine, adapting contracts and diversifying suppliers to keep costs down.”
The ONS figures show a sharp contrast with the recent period of exceptionally high food inflation. Its RPI food and catering series recorded annual inflation of 17.5% in March 2023, falling to 2.6% by July 2024 before rising again during 2025. The latest available figure in that series was 3.0% in June 2026.
However, the FDF warned that manufacturers may find it increasingly difficult to protect shoppers from future price rises. Extreme heat and dry conditions across Europe could affect the availability and cost of ingredients, alongside continuing geopolitical uncertainty.
“But supply chain disruption isn’t going away,” Danila said. “Alongside geopolitical volatility, extreme weather will continue to put pressure on the price of key ingredients.
“This makes it increasingly difficult for food manufacturers to shield consumers from price rises and protect their own resilience. It will be very challenging for manufacturers to swallow any higher costs that come as a result of the extremely hot and dry weather we’ve had across Europe this summer.”
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Danila called on the Government to strengthen the sector’s long-term ability to withstand shocks, including through support for investment.
“The government should prioritise the sector’s resilience – helping businesses to invest in technology, skills for the future and decarbonisation – so that we continue to have a dynamic and affordable food system for years to come.”
