UK food inflation rose to 5.2% adding £275 to annual grocery bills

UK food prices just got worse, and millions are feeling it. Over the four weeks ending mid-July 2025, annual grocery inflation rose to 5.2%, up from 4.7% a month earlier.

That’s the highest increase since January last year, according to Worldpanel, formerly known as Kantar. The surge is expected to add £275, or about $370, to each household’s yearly grocery bill.

With no relief in sight, families across the UK are adjusting fast. People are skipping big-name brands and leaning heavily on own-label items instead. Cheaper, store-brand products have become the go-to. Households are also making easier meals with fewer ingredients, just to keep costs down.

Retailers feel pressure from taxes, wages, and customer shifts

The rising prices aren’t just coming from supply chains. Supermarkets in the UK are being squeezed by rising payroll taxes and a higher minimum wage, both introduced under the government’s latest budget focused on raising revenue. These new expenses are being passed straight to consumers, shelf by shelf.

Some grocers are handling the squeeze better than others. Lidl, the German discount chain, just pulled off its best-ever market share at 8.3%, bringing in over half a million new customers in just 12 weeks up to July 13. Every major supermarket saw growth except for Asda and Co-op, both of which saw sales fall.

But food prices are just one layer of the problem. The UK is still dealing with the long shadow of Brexit. Since the 2016 vote to leave the EU, a lot of companies have moved their operations and workers to the continent. They were avoiding what they expected would be a mess of customs, tariffs, and regulatory chaos. And for a while, that’s exactly what they got.

Fast forward to 2025, and the dynamics are changing again, this time because of the United States. President Donald Trump is back in the White House and threatening to slap a 30% tariff on goods coming from the EU starting August 1, unless the two sides strike a deal. If that happens, the UK could suddenly look a lot more attractive to EU companies.

Trump’s EU tariffs could pull business back to UK

Alex Altmann, partner at Lubbock Fine and vice president of the British Chamber of Commerce in Germany, said the UK stands to benefit if Trump’s tariffs go through. “The UK could be a big indirect winner,” he said. If EU manufacturers want to keep access to US markets without the 30% hit, they might start setting up shop, or expanding what they already have, in the UK.

Alex explained that Brexit left the country with lots of unused factory space. That gap between the UK’s current US trade terms and the EU’s possible new tariffs could be enough to pull production back across the Channel. “The UK’s much lower U.S. tariffs would offer a major incentive for EU companies to shift some of their manufacturing to the UK or to expand their existing UK facilities,” he said.

The UK isn’t just hoping for a handout, though. It’s already landed a trade deal with the US that cuts car tariffs down to 10% and makes UK steel the cheapest option for American buyers.

London also agreed to a “reset” trade deal with the EU under Prime Minister Sir Keir Starmer, who came into power with the Labour government and was a vocal opponent of Brexit. That agreement helped reduce the tensions and delays that plagued exports after the UK officially left the EU in 2020.

Exporters have spent the past few years navigating extra red tape and shipping headaches, and despite the new agreements, the EU still makes up more than half of the UK’s foreign trade in goods, according to 2024 data from the European Commission.

The Office for Budget Responsibility expects imports and exports to be 15% lower than they would’ve been if the UK had stayed in the EU.

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