Rising fertiliser costs are among the main drivers of the latest increase in agricultural input inflation
Farm businesses are facing a renewed cost squeeze as agricultural input inflation climbed to 7.8%, while prices received for farm output fell by 1.3%.
The Andersons Centre, an agricultural consultancy, estimates that its measure of agricultural input inflation, or “agflation”, reached 7.8% in the year to September 2026.
That was up from 7.2% in August and just 1.7% in January, making it the highest rate recorded since early 2023.
By comparison, headline consumer price inflation stood at 3.1% in August, meaning farm input costs are currently rising at more than twice the pace of general inflation.
At the same time, agricultural output prices are estimated to be 1.3% lower than they were in September 2025.
The result is a gap of more than nine percentage points between the movement in farm input costs and the prices farmers receive for their output.
Longer-term cost pressures remain substantial too, with overall farm input costs now estimated to be around 40% higher than in 2020.
Fertiliser has been one of the biggest drivers of the latest increase, with prices estimated to be around 35% higher than a year ago.
Energy and lubricant costs have risen by more than 25%, reflecting continued volatility in global energy and fertiliser markets.
Contractor charges are estimated to be up 11%, while wages have increased by 5%.
Feed prices have risen more modestly, at around 3%.
The figures come as many farm businesses begin setting budgets for the 2027 season, increasing the pressure to account for higher costs and tighter margins.
Michael Haverty, partner at the Andersons Centre, said: “Inflation has permanently reset the cost base of many farm businesses, and output prices have not reliably kept pace.”
He said the growing pressure on margins meant management decisions were becoming increasingly important to farm performance.
“When margins are this tight, the gap between the best and the average business is determined as much by the quality of decisions as the quality of farming,” he said.
Andersons’ Agflation estimates are based on Defra agricultural input price indices, with individual cost categories weighted according to overall spending by UK farmers.
The consultancy then produces updated estimates of price movements and annual inflation trends across major farm input categories.