Food prices have fallen – but inflation expected to rise from here

Image source, iStock / Getty Images Plus Image caption, The ONS said food products such as chocolate and beef were falling in price By Emer Moreau Business reporter Published 22 July 2026, 07:07 BST Updated 2 hours ago Food prices are rising at their slowest rate in nearly two years, as the cost of staples such as margarine and sugar has gone down. Supermarket price wars have helped drive down prices in the year to June, the industry says, as retailers work to tempt customers with summer deals. Inflation in the UK overall has fallen to 2.6% in the year to June, down from 2.8% in the year to May, according to the Office for National Statistics (ONS), driven largely by lower fuel and food prices. June's figure will be welcomed by new Prime Minister Andy Burnham and his government, but analysts warn the fall is temporary, as higher energy prices in July are expected to push inflation back up. Lower fuel costs - particularly lower diesel prices - also pushed inflation down, with prices at the pump falling for the first time since the start of the war in the Middle East. Clothing costs fell as well due to the summer sales, with many retailers offering larger discounts than last year. Falling food prices Food and non-alcoholic beverage inflation fell by 0.2% month-to-month, with sugar, chocolate and confectionery seeing the largest drop in price. Meat, particularly beef, and vegetable prices rose in June but the increase was smaller than the same time last year. Prices of oils, fats and dairy fell in June, compared to a year previously. Food inflation often has a lag of up to 13 months due to the supply chain, so any effects from the war in Iran could still be yet to come. Fuel prices at the pump fell in June after the US and Iran agreed to halt military operations and allow the key Strait of Hormuz to re-open. But the recent resumption of hostilities and a new jump in crude oil prices means inflation could spike again in the coming months. The British Retail Consortium (BRC) said lower food inflation was driven by "intense competition between supermarkets". "If retailers are to keep prices affordable for consumers in the long run, the Government needs to take practical steps to lower the everyday cost of doing business," BRC economist Harvir Dhillon said. "Andy Burnham has taken immediate action to ease pressure on household budgets; he must now look to do the same for businesses." What information do we collect from this quiz? The new prime minister has pledged to make the cost of living a priority for his government, and new Chancellor John Healey said the lower rate of inflation was "news families want to hear" but "there is much more to do". The government announced on Wednesday morning that the bus fare cap in England will be brought back down to £2 in January . That was after Burnham announced that VAT on domestic electricity bills would be scrapped for the rest of the year from October. Healey said: "Both these changes are a win-win. They help