Food bills alert for milk, cheese, eggs as 'unannounced' change looms

Grocery bills could soon see a marked uptick as prices for essential items such as eggs, milk, and other staples will likely increase due to changes in Labour tax policy. Food industry experts suggest that the higher costs resulting from inheritance tax hikes for some farmers could ultimately lead to heftier price tags on supermarket shelves.

Fiona Peake, a personal finance expert at Ocean Finance, issued a cautionary note, saying: "We could see price increases start to trickle through relatively quickly—perhaps within a year of the changes taking effect—as farms recalibrate their finances. Essentials like dairy, meat, and fresh produce are likely to feel the pinch first, as these are core outputs of UK agriculture."

She warned even small increases could soon be noticeable, noting: "We might see milk or eggs edging up by a few pence, but over time, these small increases could add up." The alert is underscored by comments from a farmer who suggested that prices at major retailers such as Tesco and Asda may rise due to the new inheritance tax rules, set to come into force from April 2026.

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One food producer warning of higher prices is Nick Brewer, owner of the Sussex-based Oastbrook Estate vineyard, who was present at this week's protest outside Whitehall. He is also predicting that dairy prices may soar due to the tax adjustments.

He also warned that small farmers may face the dire choice of selling off land to manage their increased costs, which could result in decreased agricultural output. The winemaker cautioned that this trend is set to be "a major driver of food inflation over the coming decade".

His warning comes as the Country Land and Business Association says the changes will affect 70,000 farms. However, the government says only 500 estates a year will be affected.

Mr Brewer remarked: "This tax was unannounced and has left many farming families beleaguered with no way to resolve the problem without selling their livelihoods." He warned of the wider ecological impact of the change, adding: "Capacity will be removed, and large international conglomerates will buy productive land for solar and wind farms as well as intensive farm lots – as seen in the US. This will harm animal welfare amongst other effects."

Legal expert Tom Gauterin, director at Freeths, is also concerned there could be "widespread increases in food prices", identifying seven key UK-produced products likely to jump in cost. He outlined: "The foods produced in largest quantity by UK farmers include wheat, barley, sugar beet, potatoes, chicken, pork and beef.

"The costs of production of all of these will rise if farmers find themselves having to pay inheritance tax insurance premiums in order to keep their farms viable." Mr Gauterin set out the figures for the financial pressures for farmers, noting that the average business income per farm is a slender £40,000 for cereal farms and only £70,000 for dairy farms.

Government subsidies account for roughly 40 percent of this revenue. Mr Gauterin also raised the question of milk prices, stating: "At this stage it is difficult to tell what price increases may look like as that depends on the response of supermarkets, and Government itself.

"Supermarkets continue to squeeze farmers (milk prices fell significantly last year), and unless the government agrees to increase farm subsidies – which is unlikely – then it is hard to see just how many farmers will be able to make ends meet if faced with a substantial additional cost. And it is just as unlikely that supermarkets would seek to absorb any price increases."