Food price inflation could rise to 4% in 2025 as analyst DOUBLES forecast
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UK food inflation could near 4 per cent by the end of 2025 as supermarkets react to cost pressures arising from Labour's Autumn Budget, according to analysts at Peel Hunt. The broker on Monday doubled its forecast for 2025 food inflation from 1.5 to 3 per cent, reflecting higher employer national insurance contributions, a national living wage hike and the impact of the Employment Bill.
![[ONS data shows the impact of inflationary pressures in the wake of Russia's 2022 invasion of Ukraine on retail food prices]](https://i.dailymail.co.uk/1s/2025/01/06/10/93781493-14254549-image-a-3_1736160707210.jpg)
However, it said food inflation could grow throughout the year and by the end of 2025, the figure could be closer to 4 per cent. Peel Hunt also cited the UK's overreliance on European Union imports and the country's strained relations with the bloc, where an 'unpalatable bureaucratic spaghetti' and looming regulatory changes are set to further drive prices this year.
And while food prices are not a component of the Bank of England's measure of core consumer price inflation, Peel Hunt analysts warned higher grocery costs could weigh on policymakers' capacity to cut interest rates this year. UK food inflation neared 20 per cent in early 2023 in the wake of Russia's invasion of Ukraine the previous year.
Peel Hunt has upgraded its UK food inflation forecasts and says prices could rise 4% in 2025. The most recent data from the Office for National Statistics shows the 12-month CPIH rate for food and non-alcoholic beverages was just 2 per cent in November, though this was up from 1.9 per cent in October.
