Minimum wage rise ‘will drive up food and drink prices’

By the Editorial Team · Wednesday, October 28, 2026

The UK government plans to raise the National Living Wage by 3.9 percent to about £13.20 per hour starting next April, a move expected to increase food and drink prices. Industry experts warn that rising labor costs, combined with higher ingredient and energy expenses, could push food inflation to 6.4 percent by mid-2027, putting additional pressure on manufacturers and retailers.

The planned increase in the National Living Wage is expected to contribute to rising food and drink prices, according to industry representatives and analysts. Chancellor John Healey is anticipated to announce a 3.9 percent rise, raising the wage from £12.71 to approximately £13.20 per hour starting in April next year.

Balwinder Dhoot, representing the Food and Drink Federation, expressed concerns that while manufacturers aim to offer fair wages—often above the current minimum—rising labour costs could force them to increase prices. He noted that food producers are already facing pressure from higher ingredient costs linked to this year’s extreme weather conditions, as well as escalating energy and fuel expenses attributed in part to geopolitical tensions in the Middle East. Dhoot emphasized that manufacturers have limited capacity to absorb further cost increases and suggested that without targeted government measures, consumer prices are likely to rise.

Data from the Office for National Statistics (ONS) indicate food and drink inflation stood at 1.3 percent over the 12 months to September. However, forecasts by the Food and Drink Federation project that food inflation could peak at 6.4 percent by July 2027, reflecting growing concerns about sustained price pressure in the sector.

Clive Black, equity research analyst at Shore Capital, linked the wage rise to continuing inflationary trends in the UK food market. He argued that higher labour costs driven by government wage policy would place additional strain on supply chains and retailers. “Supply systems and retailers once again face into a UK Government that is a major source of cost growth,” Black said.

Overall inflation—as measured by the ONS—was 3.5 percent in the 12 months to September, meaning the anticipated wage increase will outpace general inflation. This dynamic is seen as challenging for businesses already managing cost pressures.

Allen Simpson, chief executive of UKHospitality, also commented on potential impacts, highlighting that the wage increase will add further financial strain to hospitality firms already dealing with significant cost hikes.

A Treasury spokesperson declined to comment on the wage adjustments ahead of the upcoming Budget announcement.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.