Why prices are increasing and what supermarkets and food manufacturers can do to avoid passing on price increases to customers

The UK’s record 27.4% increase in beef prices over the past year* (new ONS data released on 19 November) is challenging food producers, retailers and consumers alike to keep meals as affordable as possible, says supply chain experts Inverto, part of Boston Consulting Group.

Whilst beef prices have also risen in the US, the increase in UK beef prices is the biggest since the records started in 1988.

Droughts in the US in recent years and disease amongst Mexican beef cattle have pushed up international beef prices. In the UK, farmers have faced significantly higher feed costs and rising wage bills, as well as higher energy prices following the war in Ukraine. Uncertainty over farm subsidies and a range of other factors has led to an 8.5% fall in the number of cattle farms in the UK since 2020**.

The number of cattle slaughtered fell 6% in the quarter to September 2025 to 487,000, down from 516,000 a year earlier, taking beef production to a 10-year low**. Over the same period, the production of pigs increased 2% to 966,000 in the year to September 2025, up from 945,000 the previous year**.

Katharina Erfort, Principal at Inverto, says: “The unprecedented rise in beef prices over the last year is not something that food retailers and food manufacturers can easily absorb. These are industries that have relatively low profit margins.

“They are also loath to just pass these price rises on to customers as many families are still recovering from the cost-of-living crisis. We already see a shift to cheaper meals.”

In the UK, consumption of beef burgers and other processed beef products dropped 12%, while demand for minced pork rose 35%**. The trend is the same in the US, where ribeye sales have fallen while sales of less costly cuts such as chuck have increased***.

Supermarkets are experimenting with increased shelf space for lower cost beef products like mince and less space for steaks. Supermarkets can also shift the blend in different types of cuts of beef to keep the weekly shop affordable.

Food manufacturers have also been following a longer term shift to more chicken based meals as price conscious consumers have shifted away from beef and lamb. Chicken prices have increased less than 4% over the last year. This reflects a trend in the US where sales of chicken have increased sharply as a result of increased beef prices.

Erfort says that to avoid further increases, food producers and supermarkets should review their indirect costs like logistics or marketing, as these are often overlooked despite accounting for up to 15% of revenues in the case of retailers****.

She adds that many companies are now using AI to improve visibility over their supply chain costs, strengthening areas such as logistics and facilities management. Knowing what products are due, when they will arrive and at what cost helps businesses maintain tighter cost control, reduced wastage and a more efficient balance sheet. AI can also help businesses forecast traffic conditions to optimise delivery times and routes. AI can also be used to better predict demand which can help avoid the costs of overstocking and identify the early signs of inflation in input costs. 

* Source: ONS

** Source: Agriculture and Horticulture Development Board (AHDB) & Department for Environment, Food & Rural Affairs (Defra)

*** Source: Livestock Marketing Information Center

**** Source: Inverto - “Unlocking competitive advantage: why indirect spend is a strategic imperative in retail” report