Your grocery bill is about to get a lot worse – here’s how the Iran crisis is sending UK food prices soaring
UK households already grappling with elevated living costs face another significant hit to their weekly shopping bills.
The Food and Drink Federation (FDF), which represents around 12,000 food and drink manufacturers, has sharply revised its food inflation forecast upward, warning that prices for food and non-alcoholic drinks could rise by at least 9%, and potentially as high as 10%, by the end of 2026.
This marks a dramatic shift from the industry’s previous outlook. Just months ago, in September 2025, the FDF had anticipated food inflation easing to around 3.2% by December 2026.
Recent monthly figures showed it hovering at 3.6% in January and 3.3% in February 2026. The new projection reflects the rapid escalation of geopolitical tensions in the Middle East, particularly the conflict involving Iran and its effective closure of the Strait of Hormuz.
Why the Iran crisis is driving up costs
The Strait of Hormuz serves as a critical chokepoint for global oil and gas shipments, handling a substantial portion of the world’s energy supplies.
Disruptions there, combined with impacts on oil, gas, and fertiliser facilities in the region, have triggered a cascade of cost increases across the food supply chain.
The UK food and drink sector is particularly vulnerable because it is highly energy-intensive and deeply integrated into global markets.
Key pressures include:
- Skyrocketing energy and fuel costs: Manufacturers face mounting energy bills for processing, refrigeration, and greenhouse operations. Transportation costs are rising with higher oil prices, while an 80% surge in red diesel prices since the conflict began has squeezed logistics and farming operations.
- Fertiliser shortages and higher input costs: Tight fertiliser markets are affecting livestock farmers and crop growers. Reduced availability could lead to lower yields, further pushing up prices for meat, dairy, and produce.
- Shipping disruptions and supply chain delays: Even with assumptions that the Strait reopens to cargo traffic within two to three weeks and most key facilities recover within a year, rerouting and delays are adding significant expenses. This compounds earlier Red Sea issues and affects imports and exports alike.
- Broader ripple effects: Packaging costs are climbing, and some manufacturers are reporting lost sales from paused shipments to the Middle East (including items like cereals, chocolate, cheese, and biscuits). These simultaneous shocks are difficult for businesses to fully absorb.
Dr Liliana Danila, Chief Economist at the FDF, described the situation as unprecedented.
“The food and drink sector is already feeling the force of this geopolitical shock. As one of the UK’s energy-intensive industries, manufacturers are facing mounting energy bills, rising transport and packaging costs and disruption across key supply chains,” she said.
“These pressures are hitting simultaneously and are a significant challenge for businesses to absorb. It’s clear that food inflation is going to rise in the months ahead.”
What this means for British shoppers
Food prices in the UK have followed a volatile path in recent years: averaging just 0.7% in 2020 and 0.3% in 2021 before spiking to 10.9% in 2022 and a peak of 14.6% in 2023, then easing to 2.7% in 2024 and an expected 4.2% in 2025.
A return to near-double-digit inflation would reverse much of that progress and add hundreds of pounds annually to typical household grocery spending, depending on shopping habits and basket size.
Experts from the National Farmers’ Union and others have similarly flagged risks to specific items, such as higher costs for greenhouse-grown produce (cucumbers, tomatoes), dairy, and crops reliant on fertiliser.
Broader warnings suggest potential availability issues for some imported goods if disruptions linger.
The FDF notes that its revised forecast assumes a relatively swift partial recovery in the region. A more prolonged crisis could push inflation even higher.
