Food price shocks a 'permanent burden' as harvests and input costs bite

Food price shocks are becoming a permanent burden for households as poor harvests, extreme weather, war and volatile energy costs keep pushing up the cost of producing food, new analysis warns.

The Energy and Climate Intelligence Unit said major disruptions can leave shoppers paying higher grocery bills long after the original crisis has eased.

Its report, based on more than 30 years of UK data, found that when food prices rise sharply, they tend to fall back only slowly and partially afterwards.

On average, shelf prices fall by just 1% of the original rise after six months, 5% after a year and 7% after two years.

In wage-adjusted terms, only around 35% of the affordability shock had unwound after two years, according to the analysis.

The warning comes after England recorded three of its worst harvests in the past five years, with analysts warning that climate disruption is increasingly feeding through into food prices.

Farmers and growers have also faced sustained pressure from high input costs , weather-hit harvests and uncertainty across supply chains.

The ECIU described the pattern as a “rocket and feathers” effect: prices rise quickly when disruptions hit, but fall only slowly — and rarely fully — once those pressures ease.

It said this helps explain why food prices remain far above pre-pandemic levels, despite some of the pressures that initially drove them up having eased.

Several household staples have already seen steep increases since the start of the cost-of-living crisis, according to the analysis.

Pasta has risen by 50%, frozen vegetables by 55%, chocolate by 58%, eggs by 59%, beef by 64% and olive oil by 113%.

Further pressure is expected as conflict in the Middle East pushes up costs across supply chains.

The report said UK food prices are on track to be 50% higher by November 2026 compared with levels at the start of the cost-of-living crisis in mid-2021.

The ECIU said this would mean the level of food price growth seen over nearly 20 years before the crisis could be repeated in just over five years.

Chris Jaccarini, food and farming analyst at the ECIU, said the experience of shoppers was reflected in the data.

“Shoppers feeling that prices are on a never-ending escalator upwards is borne out by the data,” he said.

He warned that war and extreme weather were increasingly pushing up the cost of the weekly shop, with conflict in the Middle East affecting oil, gas and fertiliser prices.

Energy and fertiliser are major costs for farmers, while fuel and transport costs affect the movement of food through the supply chain.

These pressures can feed through from farm production to processing, distribution and supermarket shelves.

Mr Jaccarini said the UK’s recent harvest record showed how vulnerable the food system had become to climate disruption.

“In England, we’ve had three of worst harvests on record in the past five years and next year is shaping up to be the hottest globally,” he said.

The ECIU argues that reducing reliance on fossil fuels would help limit exposure to volatile oil, gas and fertiliser markets.

“As the data shows, once prices are up, they’re up - prevention is the only cure,” Mr Jaccarini said.

The report also warned that a possible “super” El Niño could place further pressure on crops and livestock.

El Niño events have historically affected agriculture, but the ECIU said their interaction with climate change was making the impact more damaging.

It warned that higher global temperatures were pushing crops and livestock closer to the limits of what they can tolerate.

Some commodities are particularly exposed.

The ECIU said El Niño tends to put upward pressure on cocoa, food oils, rice and sugar.

It added that other products linked to tropical regions, including bananas, tea, coffee, chocolate and soy-fed meat, could also face wider risks.

The report said lower commodity or energy costs do not automatically translate into lower supermarket prices.

Costs already absorbed by processors, retailers and supply chains can remain baked in, meaning prices for consumers often stay elevated even after upstream pressures ease.

The ECIU said this shows how supply disruptions can push prices up through the food system, while the easing of those pressures does little to bring them fully back down.

Henry Dimbleby, former lead of the government’s National Food Strategy, said food inflation would continue to hit households unless the underlying causes were addressed.

“Food inflation has been brutal - and it will keep biting unless we tackle the underlying causes,” he said.

He said the food system remained closely tied to energy, fertiliser and transport costs, while too little resilience had been built into supply chains and production.

Mr Dimbleby warned that climate change and energy volatility were likely to make price spikes more frequent and severe.

“Unless we cut our reliance on fossil fuels, diversify supply chains and build real resilience into food production, higher food prices will become a lasting feature of daily life,” he said.

The warning comes after households have already seen food prices rise by more than 40% since mid-2021.

Over the same period, wages have grown by less than 30% on average.

The ECIU said this had left food affordability under increasing pressure, particularly for lower-income families.

For families with children in the lowest fifth of earners, a healthy diet now requires around 70% of disposable income after housing costs, according to the analysis.

Anna Taylor, executive director of the Food Foundation, said the lasting impact of food price shocks was particularly concerning.

“What’s striking here is the lasting impact of these shocks: once food prices go up, they rarely come properly back down,” she said.

She warned that food becomes harder to afford for millions of people in Britain, even after the initial crisis has moved out of the headlines.

Ms Taylor said the UK needed to focus on reducing the impact of future disruptions, rather than only responding after the damage had been done.

“The UK needs to stop lurching from crisis to crisis and put a long-term plan for food resilience on a statutory footing,” she said.

She added that a Good Food Bill could help protect families, farmers and food businesses by building a more resilient food system.

The ECIU said climate-driven food inflation was also becoming harder for central banks to control, because many of the pressures come from supply disruption rather than consumer demand.

It said the Bank of England had repeatedly warned that food prices and inflation were highly vulnerable to extreme weather made more likely by climate change.

David Barmes, senior policy fellow at LSE’s Centre for Economic Transition Expertise, said the findings highlighted a wider economic problem.

He said many of the pressures increasingly driving inflation were supply-side shocks linked to climate impacts and geopolitical disruption.

These are the types of inflationary pressures that interest rates alone are poorly suited to solving, he added.

“When harvest failures, energy price spikes, or supply-chain disruption push inflation up and output down at the same time, policymakers face much harder trade-offs,” Mr Barmes said.

The ECIU said the findings showed that food resilience must be treated as a long-term production, climate and supply-chain issue — not something that can be solved after each crisis has already pushed prices higher.