Cost of food, cars and holidays will keep rising until 2027

Britons could continue to suffer the “pain” of higher food prices due to the Iran war for another 18 months despite Donald Trump’s peace deal , The i Paper has been told.

Shopping bills could carry on rising until the end of 2027 because of all the extra costs faced by farmers and food manufacturers , economists have said.

Petrol and diesel prices may not come down substantially at the forecourt until 2027, the experts also warned British motorists. UK holidaymakers’ flight prices could be affected for many more months too.

Shorts

Oil prices eased below $80 a barrel after the US and Iran signed a “memorandum of understanding” to end the war and reopen the Strait of Hormuz shipping route.

Despite the huge sense of relief, uncertainty remains because Washington and Tehran still have to negotiate a final deal in a “maximum” of 60 days.

‘Lot of pain’ ahead for food bills

UK farmers and growers have had to deal with a huge rise in fertiliser, red diesel and other energy costs since the conflict, launched in February, rocked global shipping.

It means it could continue to cost more to produce in the year ahead, with supermarket prices expected to get sharper from the autumn, experts told The i Paper .

“There is still a lot of pain to come in terms of the second-order impacts on food prices and the supply chain,” said Ashley Kelty, energy analyst at investment bank Panmure Liberum.

“I think the impact on food prices could continue for 18 months, until the end of next year,” he added.

Marco Forgione, head of the Chartered Institute of Export and International Trade, said higher insurance and shipping costs are likely to remain in place for the food supply chain for the foreseeable future.

The impact on fertiliser, red diesel and chemical prices for farmers preparing for next year’s planting and harvest may not become clear for several months, he added.

“Food prices lag because of planting and harvest cycles, so we are likely to see elevated food prices well into 2027,” said Forgione.

“It’s hard to say at this stage, but it could possibly go on into late 2027,” he added. “I do think food prices could well be higher next year than they are this year.”

Why annual shopping bills could go up £470

Phil Pluck, the Cold Chain Federation’s chief executive, thinks the Food and Drink Federation’s prediction of food inflation hitting at least 9 per cent by the end of 2026 is still relevant.

“There are so many extra costs that only begin to hit home in terms of rising food prices to the consumer from the autumn,” said Pluck. “Those will continue to be felt through the winter, into 2027.”

“I would hope we start to see some stabilisation in food prices next year. But it’s too early to say – any uncertainty in energy supply could mean further price rises. Food prices coming down next year is too much to hope for I’m afraid.”

Meats, chicken, baked goods, fruit and veg could all get more expensive in the months ahead, food bodies previously told The i Paper . Pub owners also warned that £9 pints could become normal in London and £7 elsewhere in the country.

A 9 per cent increase would add £470 to average annual shopping bills, according to NimbleFins insurance firm’s analysis of Office for National Statistics (ONS) data .

‘Elevated’ petrol prices until next year

Both petrol and diesel prices may start to come down for UK motorists at the forecourt within weeks – but they may not return to pre-conflict levels until the end of 2026.

The RAC said it expects the price of petrol to fall from its current average of 156p per litre to 148p within the next fortnight, and diesel to similarly fall from 177p to below 160p.

Petrol and diesel prices have soared due to the Iran war over the past four months and are expected to return to pre-war levels slowly (Photo: Finnbarr Webster/Getty)

However, Kelty, the energy analyst, warned of volatility in both oil supply and prices continuing for at least three to six months – even if Trump’s deal holds.

There will be problems getting the Middle East’s oil production capacity back to normal for several months. There will also be fierce competition among countries to rebuild their oil stockpiles, he said.

“Petrol and diesel prices should start to come down within a few months – but perhaps not by as much as people expect,” said Kelty. “The volatility could continue into next year.”

Adam Bell, a partner at energy consultancy Stonehaven, said the global “rush to rebuild” oil stockpiles will keep prices higher than before the conflict for the rest of this year.

“This means we should assume petrol and diesel prices remain elevated into Christmas,” said the former UK government adviser.

“This will impact food costs – meaning that people will still be feeling the effect of Trump’s war as they buy their turkeys for Christmas.”

The recent rise in air travel costs may not begin to stabilise until 2027, experts also warned. “There will continue to be pressure on jet fuel in the US and A…