Food prices to soar for two years and energy prices forecast to jump 25% as cost of living squeeze deepens under Andy Burnham

See more This is Money on Google - save us as a Preferred Source Updated: 19:01 EDT, 15 September 2026 Families face soaring food prices for at least two more years on top of a sharp energy bill spike this winter as Britain’s cost of living squeeze deepens.In a bleak industry forecast, experts said food inflation could hit 6.6 per cent in 2027 and remain almost as high in 2028.And separate analysis yesterday predicted that already-high energy bills could shoot up by 25 per cent in January.Meanwhile official figures revealed that anaemic pay growth of 2.9 per cent is barely keeping pace with rising prices – except for those in the public sector who are enjoying inflation-busting increases averaging 6.3 per cent.It adds up to a bitter first winter under Prime Minister Andy Burnham, who came to power with a pledge to give ‘breathing space’ to struggling households.Figures today are expected to show inflation climbing above 3 per cent. That will mean millions are now seeing their pay grow more slowly than prices. Cost of living: Food inflation could hit 6.6% next year, experts forecast and remain almost as high in 2028And in a new report, the Institute of Grocery Distribution (IGD), a trade body, forecasts that the increase in the cost of the supermarket shop is set to accelerate – in a major blow to families after it eased earlier this year.It predicted food inflation of between 2.9 per cent and 3.9 per cent this year, rising to between 5.6 per cent and 6.6 per cent in 2027. For 2028 it is forecast at 5.3 per cent to 6.3 per cent.Earlier this year, retailers had kept prices down by buying in advance. Meanwhile, food stocks were plentiful and demand was moderate.But IGD chief economist James Walton said the impact of higher energy prices and extreme weather events such as El Nino had been ‘delayed, not removed’. The growing pressure will narrow the options for families already struggling to put food on the table.‘Shoppers have already adapted to repeated periods of high food price inflation,’ Mr Walton said.‘Many have changed how and where they shop, switched products or reduced discretionary spend, leaving fewer options available to absorb any further price rises.’Meanwhile, energy bills – already set to climb to a three-year high in October – look on course to rise even further in January as continuing conflict in the Middle East pushes up global gas prices.Experts at Bloomberg Economics yesterday predicted the energy price cap set by Ofgem will rise by 25 per cent at the start of the year, lifting typical annual bills by £427 to £2,150 just at the time the cold will be biting.That will deepen the misery for consumers who are also being squeezed by the soaring cost of fuel caused by surging oil prices.Yesterday, RAC figures showed average petrol prices soaring past £1.70 a litre to the highest since August 2022. And diesel rose to nearly £1.93, the highest since July 2022.‘Unfortunately for hard-pressed drivers, prices look set to keep on rising due to the cost of a barrel of oil consistently trading over the $100 mark,’ said Simon Williams, the RAC’s head of policy.For home owners, there could be even worse to come as the inflation squeeze puts the Bank of England under pressure to raise interest rates.The Bank is expected to leave its benchmark rate on hold at 3.75 per cent when it announces its latest decision tomorrow but markets are betting there will be five hikes by the end of 2027, taking it to 5 per cent.Any attempt by the PM to offer help to cushion the blow of higher living costs is likely to be hampered by Britain’s deteriorating fiscal situation.Bond markets have sent borrowing costs soaring – narrowing any scope for extra spending at next month’s Budget when Chancellor John Healey will already be trying to find funding for defence, social care and council house building plans.It may mean that yet again the burden falls on taxpayers, even after £75 billion of tax increases under Mr Healey’s predecessor Rachel Reeves.DIY INVESTING PLATFORMSAJ BellAJ BellEasy investing and ready-made portfoliosHargreaves LansdownHargreaves LansdownFree fund dealing and investment ideasinteractive investorinteractive investorFlat-fee investing from £4.99 per monthFreetradeFreetradeInvesting Isa now free on basic planTrading 212Trading 212Free share dealing and no account feeAffiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.Compare the best investing account for you