UK Grocery Prices and Iced Coffee Sales
As UK grocery prices climbed to a 5.2% inflation rate in July 2025—the highest since January 2024—sales of iced coffee jumped 33%, highlighting a surprising consumer trend amid rising costs. This paradox comes as price trends for essentials like cakes and cheddar cheese pushed grocery inflation upward, while consumer preferences shifted toward chilled beverages despite tightening budgets.
Food inflation rose to 4.5% in June 2025 from 4.4% in May, with forecasts predicting average increases of 4.2% through late 2025. This aligns with retail analysts’ warnings that grocery inflation will peak in late summer before moderating slightly by year-end. The British Retail Consortium expects rates to dip to 3.8% by year-end, though supermarkets show uneven impacts. Tesco recorded the highest annual food inflation at 5.9% in May, followed by Morrisons (5.4%) and Waitrose (4.2%).
Since April 2022, weekly food costs for individuals have climbed 27-29%, reaching £52.13 for women and £55.98 for men, according to the Food Foundation. Nearly two-thirds of households now rank grocery costs as their top financial worry, above energy bills.
Yet iced coffee sales defied broader spending cuts. Analysts link the 33% surge to demand for affordable treats and convenient, ready-to-drink options during warmer months. Retailers have expanded chilled beverage selections to capitalize on the trend, even as shoppers reduce non-essential purchases.
Rising costs stem from pricier processed foods, supply chain strains, and geopolitical instability. Energy expenses and post-Brexit trade friction further pressure retailers, with some passing costs to consumers. The climate crisis impacts, including extreme weather and flooding in early 2025, threaten to exacerbate food supply disruptions and pricing pressures later in the year.
While inflation’s pace is slowing, prices remain 18-20% higher than pre-pandemic levels. Forecasts suggest gradual easing—3.0% in 2026 and 2.1% in 2027—but households face persistent strain.
The iced coffee boom underscores how selective spending persists even in tough times, revealing divides between struggling sectors and resilient niches in a shifting market.
