Government urged to relieve regulatory pressure on manufacturers

It said that food inflation is expected to be higher than historical averages throughout 2027.

The predicted rise in inflation comes as part of FDF’s latest forecast, which attributed the rise to the shock of the conflict in Iran, as well as the impacts of “extreme weather” on the global food chain. FDF claimed that food manufacturers’ resilience was “wearing thin” as a result.

In order to combat food inflation, FDF called on Government to relieve immediate regulatory pressure on the industry and take the UK’s food security seriously. The inflationary fallout of the Iran war was also expected to be a longer plateau, with FDF stating that it will come later than previous shocks.

Energy prices contribute to rising inflation

According to ONS and MarketWatch data, gas prices have more than doubled since February 2026. The UK’s electricity prices are some of the highest in Europe, while diesel prices have risen by 28.6% since the start of the Middle East conflict.

Karen Betts, chief executive of the FDF, commented: “Food and drink manufacturers have kept food prices as low as possible during the energy shock since the closure of the Strait of Hormuz, including by driving new efficiencies in their operations. But they can’t do this indefinitely. The persistently higher costs of energy, logistics and packaging, compounded by this summer’s extreme heat, mean that food prices will rise this year, and we believe that rise will be sustained into 2027.”

Climate related events were compounding energy problems, said FDF, and it highlighted that businesses in the food system were adapting their ways of working by diversifying supply chains and hedging their contracts more. It said that as a result, the change in inflationary pattern to a longer plateau is “likely to be repeated” for other shocks.

Government should act now to prevent price rises

In 2025, FDF estimated that five Government regulations alone added £2 billion of costs to the sector, including EPR, changes to employers’ NI contributions, the Plastic Packaging Tax and changes to advertising restrictions.

While many costs are baked-in, it said, Government can act now to keep a lid on further price rises and protect consumers from a more severe hit. For example, by offering targeted support with energy bills for the sector, which other manufacturing industries already receive. It commented that Government must prioritise effectively implementing its current packaging and recycling reforms, which it said are “already adding billions” to the cost of making food. FDF urged Government to pause its plans to change advertising and promotion rules, which it said would take “significant resource” at a time when the sector is already stretched.

Betts continued: “As the Prime Minister has recognised, households need some breathing space. Tackling the rising costs of food production will help with the cost of living, as well as giving businesses the confidence they need to invest in a resilient food system. Food manufacturing is embedded in every postcode in the UK, so ensuring our industry is fairly supported with energy costs will support growth and jobs everywhere. Ensuring regulation is proportionate and paced will drive down our rapidly rising compliance costs.

“By taking action, Government can take the heat out of food inflation, help keep a lid on the cost of the weekly shop, and signal to hard-pressed food manufacturers that they take food security seriously.”