Inflation has hit almost everything this year as we navigate a turbulent global political climate. The price of gas and fuel is skyrocketing, and now The Food & Drink Federation said food price inflation could hit 10% by the end of the year following the war in Iran. No sector is immune from these rising costs; Here’s what inflation could mean for your hospitality business:
Food Prices
The Food and Drink Federation (FDF) warned that food price inflation could rise to 10% by the end of the year as ongoing conflict in the Middle East continues to inflate energy and supply chain costs. They previously predicted that food price inflation would decline to 3% by the end of 2026, however, the rising cost of oil and gas is having an ongoing knock-on effect on food production and exports.
As well as this, around a third of the UK’s fruit and vegetables are produced in greenhouses, with energy accounting for 25% of overall production costs. As fuel costs rise, so do the costs of growing the UK’s fruit and vegetable supply.
This will have a huge impact on costs for hospitality in the UK, particularly as trade becomes more expensive. Consumers may see these rises reflected in their bill as businesses attempt to offset the rise in prices across the board.
Oil and Energy
It is common knowledge to the entire UK population that fuel and energy costs are surging like crazy. Hospitality businesses will see big increases in their energy and fuel bills, especially those relying on oil for heating.
This will be even worse for rural businesses who rely on these supplies for heating and fuelling their businesses. For businesses that hire their own delivery drivers, the cost of petrol and diesel will also begin to take a toll.
Alcohol
As of 1st February 2026, duty on alcohol rose in the UK to align with Retail Prices Index (RPI) inflation, about 3.66 %. A bottle of gin may see ~38p extra tax added. A bottle of Scotch whisky may see ~39p extra duty. A 14.5 % red wine may pay ~14p more in duty. The cost of a pint in pubs could see an effective increase of around 2p per pint just from duty. While these are paid by producers and wholesalers, there will be a trickle-down effect on prices.
