Grocery bills could soon increase again with prices for eggs, milk and other staples going up due to a change in Labour tax policy.
Food industry experts are warning the extra costs of inheritance tax increasing for some farmers could be passed on with larger prices on the supermarket shelves.
Fiona Peake, personal finance expert at Ocean Finance, cautioned: “We could see price increases start to trickle through relatively quickly—perhaps within a year of the changes taking effect—as farms recalibrate their finances.
“Essentials like dairy, meat, and fresh produce are likely to feel the pinch first, as these are core outputs of UK agriculture. We might see milk or eggs edging up by a few pence, but over time, these small increases could add up.”
The warning comes after a farmer warned prices could bump up at Tesco and Asda as a result of the changes to inheritance tax, which come into force from April 2026.
One food producer warning of higher prices is Nick Brewer, owner of Sussex vineyard group Oastbrook Estate, who attended the protest in Westminster this week.
He is also predicting dairy prices could rise as a result of the tax changes, warning that small farmers may have to sell up to cover their costs, leading to land being taken out of production, as a result of a move in the Budget that could hit 70,000 farms according to the Country Land and Business Association – although the government says only 500 estates a year will be affected.
He warned this trend will be “a major driver of food inflation over the coming decade”. Mr Brewer said: “This tax was unannounced and has left many farming families beleaguered with no way to resolve the problem without selling their livelihoods.”
He also said wildlife enthusiasts should be concerned by the change, stating: “Capacity will be removed, and large international conglomerates will buy productive land for solar and wind farms as well as intensive farm lots – as seen in the US. This will harm animal welfare amongst other effects.”
Legal expert Tom Gauterin, director of Freeths, warned of “widespread increases in food prices”, pointing to seven popular UK food products that could surge in price.
He said: “The foods produced in largest quantity by UK farmers include wheat, barley, sugar beet, potatoes, chicken, pork and beef.
“The costs of production of all of these will rise if farmers find themselves having to pay inheritance tax insurance premiums in order to keep their farms viable.”
He spelled out the tight margins that farmers face, with average business income per farm at barely £40,000 for cereal farms and just £70,000 for dairy farms, with Government subsidies providing around 40 percent of this income.
Mr Gauterin also had a word of caution about milk prices. He said: “At this stage it is difficult to tell what price increases may look like as that depends on the response of supermarkets, and Government itself.
“Supermarkets continue to squeeze farmers (milk prices fell significantly last year), and unless the government agrees to increase farm subsidies – which is unlikely – then it is hard to see just how many farmers will be able to make ends meet if faced with a substantial additional cost.
“And it is just as unlikely that supermarkets would seek to absorb any price increases.”
