Household expenditure on food and non-alcoholic beverages

IBISWorld forecasts that household expenditure on food and non-alcoholic beverages will shrink at a compound annual rate of 0.6% over the five years through 2025-26 to total £124.6 billion. In the past five years, consumer expenditure has increased as confidence rebounds and food production costs have risen, especially in the final year of the period. At the start of the period, household expenditure on food and non-alcoholic drinks began to rise as the economy started to recover, with employment rising. Additionally, the rising pound reduced unit price costs for food and a trend of premiumisation of food. The low interest rates have made saving returns less desirable and increased the consumer propensity to spend their income. Expenditure on food and non-alcoholic drinks rose by a substantial 7.6% over 2016-17, despite the reduction in business confidence following the result of the EU referendum. This is in response to the pound's sharp depreciation, which caused food prices to rocket because of the high level of imports of British food.

In 2020-21, household expenditure on food and non-alcoholic beverages jumped by 6.6%. This is a result of the effects of the COVID-19 (coronavirus) outbreak. In times of economic uncertainty, consumers tend to reduce their expenditure where possible, like buying cheaper food items. Even so, the nature of the coronavirus outbreak has led to a strong upswing in household expenditure on food and non-alcoholic beverages. The government-imposed restrictions left limited alternatives for consumer expenditure, particularly in periods of lockdown and severe regional restrictions. Expenditure has also been supported by government support for jobs and wages, leading to a limited fall in consumer income. Since 2021, the new agreement reached for the EU-UK trading relationship has caused food prices to rise, resulting from higher regulations on agri-food imports, despite the deal being tariff-free. The energy crisis in Europe has also caused food production costs to increase substantially. Spending is projected to rise 0.3% in 2025-26.