UK food inflation is set to climb towards 5% by early 2027, even after a reassuring global harvest update calmed grain markets, according to Shore Capital.
The stockbroker said the US Department of Agriculture's September World Agricultural Supply and Demand Estimates (WASDE), a closely watched monthly report on global crop output, pointed to higher wheat supplies and fuller stores.
Global wheat supplies were nudged up by 3.5 million tonnes to 1,103 million tonnes, with ending stocks raised by 3 million tonnes to about 276 million tonnes.
Much of the extra output came from Australia, where local farm agency ABARES lifted its forecast by 3 million tonnes on favourable growing conditions in South Australia and Victoria.
Rice supplies were also raised, largely on the back of India, while forecasts for maize and oilseeds were trimmed only modestly.
Shore Capital analysts Clive Black and Akhil Patel described the update as a calming influence, coming as the northern hemisphere harvest nears completion.
They said the report should let the bakery and livestock trades, both heavily reliant on wheat, plan procurement with more confidence in the near term.
Despite that, the pair expect British food inflation to build from 1.3% in July towards a range of 3% to 5% as 2026 closes and into the first half of 2027.
They pointed to Brent crude at $107 a barrel, which lifts distribution and packaging costs, alongside fertiliser prices sitting around 15% above pre-conflict levels.
UK dairy prices are expected to firm after a poor summer for pasture, while a wave of sow culls across Europe could push pig meat costs higher in 2027.
The note also renewed the firm's long-running concern over UK food security, estimating that Britain is less than 60% self-sufficient in food, and probably below 50% once Northern Ireland is excluded.
Shore Capital cited a recent rebuke of the Department for Environment, Food and Rural Affairs (Defra) by the National Audit Office over its handling of the issue.
