Retailers across the UK are warning that food prices may continue rising in the coming months as the conflict involving Iran drives up energy, transport and supply chain costs. Industry leaders say households are already feeling pressure from inflation and fear further increases at supermarket checkouts.
The British Retail Consortium (BRC) has urged ministers to delay or remove a series of taxes and regulations which retailers argue are adding extra strain during an already volatile period. According to the BRC, businesses are facing mounting costs from higher national insurance contributions, packaging levies and energy charges alongside the wider impact of instability in the Middle East.
Food inflation has become an increasing concern for policymakers and consumers alike. According to reporting from The Independent, the Energy and Climate Intelligence Unit warned that food costs could be 50 per cent higher by November than they were at the beginning of the cost of living crisis in 2021.
Retailers Say Conflict and Government Policies Are Combining to Increase Pressure
The BRC said retailers are already absorbing higher shipping, fertiliser and distribution costs linked to the Iran conflict, though businesses expect some of those increases to eventually reach consumers. Helen Dickinson, chief executive of the BRC, said families were “right to be concerned” about rising prices.
Speaking on behalf of retailers, Dickinson argued that not all cost pressures were linked to international events. According to the BRC, supermarkets and food retailers have absorbed £6.5 billion in additional employment-related costs over the past two years. The organisation also pointed to a packaging tax worth £1.6 billion and warned that upcoming regulations could create further financial pressure.
Among the measures highlighted were guaranteed-hours provisions under the Employment Rights Act and proposed changes linked to the Nutrient Profiling Model, which retailers say could force them to alter the marketing of thousands of food products. The industry body also called on the Government to reconsider energy-related charges. Retailers reportedly told Chancellor Rachel Reeves during a meeting in April that levies and network charges account for between 57 and 65 per cent of a typical business electricity bill.
According to reports, retailers believe ministers still have time to intervene and reduce domestic costs before price increases become more severe. Dickinson also referenced action in Germany, where electricity costs for businesses have reportedly been reduced through changes to levies.
Inflation Fears Grow as Households Brace for Higher Bills
Public concern about inflation appears widespread. A poll conducted for the BRC by Opinium found that 80 per cent of respondents feared the Middle East conflict would push food prices higher. The same survey found that 81 per cent were worried about rising energy bills, while 76 per cent expressed concern about petrol and diesel costs.
The Bank of England has already warned that inflation could rise from its current level of 3.3 per cent to 6.2 per cent by early 2027. According to The Independent, the central bank also indicated that food inflation could reach 7 per cent over the same period. Separate forecasts from the Food and Drink Federation suggested food inflation could climb even higher. According to The Mirror, the organisation warned that food inflation may reach 9 per cent by the end of 2026.
Charities have also raised concerns about the effect on lower-income households. Anna Taylor, executive director of the Food Foundation, said rising food prices leave struggling families with “nowhere left to cut except the food on their plate”. The Treasury said it was working with the sector to limit pressure on household budgets. A government spokesperson stated that selected food tariffs had already been suspended as part of efforts to help consumers manage rising supermarket costs.
