The Zhitong Finance App learned that British food producers' predictions show that the El Niño phenomenon, summer droughts, and a series of impacts brought about by the Middle East War will push the British food inflation rate to more than 6% next year. The British Food and Drink Federation warned that by Christmas the food inflation rate will reach nearly 4%, more than double the current level, then continue to accelerate and reach a peak of 6.4% in July 2027. This will be the highest yearly increase since the beginning of 2024.
The British Food and Drink Manufacturers Industry Association said that if food prices rise at the rate it predicts, food procurement spending will rise from £100 ($135) per week in 2020 to close to £150 next summer. This will further increase the cost of living pressure, and the cost of living issue has now become a top issue on British Prime Minister Burnham's agenda. He has signalled that more measures will be introduced to help families and businesses, but before the fall budget is announced, he is facing a deteriorating financial environment.
Food inflation in the UK is expected to reach its highest level since the beginning of 2024
According to reports, the World Meteorological Organization (WMO), an agency under the United Nations, issued the latest notice on September 3, confirming that the El Niño phenomenon has formed and will continue to increase. It is expected to develop into a superscale event, which will have a major impact on global precipitation and temperature patterns, and related extreme weather risks will continue until 2027. According to WMO's latest predictions, the possibility that the El Niño phenomenon will continue until the end of February 2027 is now close to 100%.
J.P. Morgan previously warned that the next round of the global food crisis could be brewing or break out next year. The bank's analysts attributed the drivers to the “five Ws”: War (War), Weather (Weather), Warehousing (Warehousing), Water (Water), and Waste (Waste). In a new report entitled “Food security is national security: a storm that continues to pile up,” a team led by Nora Szentivanyi, a senior global economist based in London, warned that disruptions in shipping in the Strait of Hormuz and the emergence of a potentially historically strong El Niño phenomenon could weaken crop production, limit agricultural production, and keep food inflation high in the first half of 2027. She expects the global food inflation rate to accelerate from 2.8% in the first half of 2026 to 5% in the first half of next year.
Although the food inflation rate is currently controlled at 1.2%, the industry is facing multiple pressures. In addition to the possibility of an unusually large El Niño phenomenon — given that imported food accounts for about 40% of the UK's total food supply, the UK is particularly vulnerable to overseas weather events. Britain's widespread droughts and rising energy costs due to the war between the US and Iran may also cause British consumers to face higher food prices.
Karen Betts, CEO of the British Food and Drink Federation, said: “Continued high energy, logistics and packaging costs, combined with extreme heat this summer, mean that food prices will rise this year, and we believe this increase will continue until 2027.”
When the above forecast was released, Bank of England Governor Bailey had previously warned consumers to prepare for an accelerated rise in supermarket prices. Pele told lawmakers on Tuesday that farmers have discovered a decline in the production of cereal crops, including winter wheat, spring barley and oats, which is putting upward pressure on prices. He added that the El Niño phenomenon could increase the pressure on food supplies by affecting rice, coffee, cocoa and palm oil.
When questioned by the Finance Committee, he said, “Food price inflation has been below our expectations. However, I think unfortunately this is another area where risk is biased towards the upside. We have included a further increase in the food inflation rate at the end of this year in the forecast, so this factor is already included in our forecast. But we will have to continue to re-evaluate this issue.”