The Food and Drink Federation has warned that grocery prices will continue rising into 2027, with the possibility of shortages, as one of the UK’s hottest and driest summers on record cuts supplies of fruit, vegetables and grain.
The trade body, which represents food and drink manufacturers, said the lack of rainfall and arid conditions were likely to lead to higher prices and lower supplies of fruit and vegetables, putting upward pressure on food inflation into next year.
The supply of a number of UK-grown crops, including broccoli and cherries, has already come under pressure, while poor grain harvests are driving up the cost of animal feed, which could lead to more expensive meat.
The warning comes as Britain braces for the fifth heatwave of the summer, with temperatures expected to reach as high as 38C on Thursday. More than two thirds of England has been declared to be in drought this week.
Dr Liliana Danila, chief economist at the FDF, said: “Not only is the UK experiencing one of its hottest and driest summers on record, but across most of Europe heatwaves and severe droughts are impacting fruit, vegetable and grain supply.
“Competition for fewer resources will in turn push up the price of ingredients for manufacturers. The UK’s food and drink manufacturers work hard to absorb costs where they can, but are already grappling with rising costs as a result of war in Ukraine and in Iran, so we expect the additional upward pressure of reduced crops will be reflected in retail prices into next year.”
Retailers have already reported food prices rising this summer as hot weather reduced harvest yields. Food inflation climbed to a peak of 19.2 per cent in 2023, and household bills rose rapidly after Russia’s invasion of Ukraine four years ago.
At its interest rate meeting last month, the Bank of England warned that an especially strong El Niño weather phenomenon, as has been predicted this year, would lead to “hotter and drier conditions across several major agricultural-exporting regions [which] could reduce crop yields and put upward pressure on global food prices”.
The Agriculture and Horticulture Development Board said milk production has already been affected by the extreme heat, with yields hit by heat-stressed cows and poor conditions for grass grazing.
NatWest has drawn up plans to offer loan repayment holidays and overdrafts to its more than 40,000 farming borrowers, who face the prospect of lower crop yields. The bank warned that the impact could outlast the immediate heatwave, with warmer weather increasing the risks of disease outbreaks and damaging livestock productivity.
Ian Burrow, head of agriculture at NatWest, said: “British farmers are increasingly being forced to manage the consequences of weather extremes, from flooding one season to drought the next. The challenge for many businesses is no longer simply recovering from a single event but building resilience for a future where these conditions are becoming more frequent.
“With harvests progressing earlier than usual in some areas and livestock farmers already relying on winter feed stocks due to poor grass growth, cashflow and feed availability could become increasingly challenging.”
Analysts at Shore Capital have warned that Britain faces its worst food security crisis in decades as repeated heatwaves risk ruining farmers’ harvests.
