This rise is expected to place further pressure on both households and businesses, as the UK economy continues to grapple with sluggish growth and persistent price pressures. Looking ahead to 2027, the report offers cautious optimism, forecasting a gradual decline in food inflation to 1.8% by mid-2027.
The report also outlines that food prices are now the top concern for UK shoppers, overtaking worries about energy costs as they brace themselves for higher food bills in 2025.
Michael Freedman, head of economic and consumer insight at IGD, commented: "Amid economic uncertainty, shoppers are cautious with their finances, increasing private label purchases while reducing impulse and indulgence buys. We identified only 29% of consumers plan to cut back on grocery spending, suggesting many have already tightened their budgets and have little room to cut back further.
“Instead, shoppers are more likely to look for savings on discretionary purchases like clothing and eating out, underscoring a clear prioritisation of food shopping over other categories. Businesses should adapt to shifting customer behaviours by offering value, convenience and memorable experiences to attract customers and drive growth.”
Download the latest IGD Economic Viewpoint Report here.