Middle East Conflict Drives UK Food Inflation Forecast to 10 Percent

British grocery shoppers face average food price increases of up to 10 per cent by December 2026, according to the Food and Drink Federation (FDF), as the ongoing conflict in the Middle East exerts mounting pressure on energy costs and global supply chains.

The FDF, an industry body representing approximately 12,000 companies across the food and drink manufacturing sector, had previously projected that food inflation would follow a gradual downward trajectory throughout the year, easing to around 3 per cent by year-end. That forecast has been materially revised in light of rapidly deteriorating conditions stemming from the Middle East crisis.

The closure of the Strait of Hormuz has proved to be a significant catalyst, driving oil and gas prices sharply higher and raising the cost of production across an already energy-intensive industry. Transportation costs are also expected to climb in tandem with rising fuel prices, compounding the pressure on manufacturers throughout the supply chain.

Beyond oil and gas, the disruption has extended to broader commodity markets. Fertiliser prices have been adversely affected, whilst crop growers, particularly those dependent on high levels of energy consumption for greenhouse heating, are contending with acute cost volatility. The FDF cautioned that these converging pressures leave little room for producers to absorb additional expenditure without passing costs on to consumers.

British exporters of food products popular in the Middle East, including cereals, chocolate, cheese and biscuits, have faced a further setback, with some producers pausing or cancelling shipments to the region entirely. The resulting loss of sales revenue adds a dimension of commercial uncertainty that compounds operational cost pressures for manufacturers.

Brent crude, the international oil benchmark, climbed as high as USD 120 per barrel last month as supply fears intensified following the strait’s closure. Prices retreated towards USD 100 per barrel on Wednesday after President Trump indicated that Iran had requested a ceasefire, offering markets a tentative signal that the conflict could be resolved sooner than anticipated. Analysts have nonetheless cautioned that recent strikes on energy infrastructure may produce longer-lasting disruption to oil and gas supplies, irrespective of when the strait reopens.

Liliana Danila, chief economist at the FDF, characterised the situation as one in which multiple cost pressures are “hitting simultaneously, and are a significant challenge for businesses to absorb.” She added that the current environment is “unprecedented and hard to predict,” and that despite companies’ efforts to shield consumers from price increases, a sustained rise in food inflation in the months ahead is now unavoidable.

The data underscores the scale of the reversal facing UK consumers. Food and non-alcoholic drink inflation averaged 3.3 per cent in February 2026, down from 3.6 per cent in January and 4.2 per cent across 2025 as a whole. The prospect of a return towards double-digit inflation carries particular resonance given that food inflation reached nearly 15 per cent in 2023 during the energy price shock triggered by the war in Ukraine, a precedent that will weigh heavily on both policymakers and industry stakeholders as the situation develops.