In the wake of George Osborne’s controversial “pastygate” budget proposal 13 years ago, where he planned to introduce a 20% VAT on hot food, the price of a Greggs sausage roll was 66p. As of 2025, the same item costs £1.30. Since Osborne’s U-turn, prompted by public backlash including from Greggs, rising food price inflation has led to increased consumer hesitance regarding takeaway purchases.
Greggs’ sales growth has slowed, and its share price has halved within a year. The chain and similar retailers, such as Pret a Manger, are exploring consumer reactions to rising prices on sandwiches, salads, and coffee. Richard Lim, chief executive of Retail Economics, noted that consumers are becoming more budget-conscious, with many products now pushing the limits of what they are willing to pay. As Labor prepares for an upcoming budget, the historical context of pastygate remains relevant as discussions around inflation continue.
Current UK inflation stands at 3.8%, with food inflation exceeding 5% expected by autumn. Fast food pricing has surged 33% since 2020, outpacing general inflation. Businesses attribute this to a £25 billion increase in national insurance contributions, making price hikes necessary, yet they acknowledge consumers’ limits amidst economic strains.
Further complicating the landscape is the growing disparity in spending habits between socio-economic groups. The poorest households reportedly cut food spending by 5% in real terms last year, while the wealthiest maintained their expenditures. Meanwhile, savings rates are above pre-pandemic levels, with wage growth surpassing inflation; however, rising unemployment and discussions of tax increases threaten consumer confidence.
Market observers point to changing consumer preferences. Greggs and other takeaway options are facing challenges as health trends emerge, affecting sales of traditionally popular items. Dean Turner from UBS Wealth Management attributes shifting spending priorities to high inflation and stagnant wage growth.
Source: https://www.theguardian.com/business/2025/sep/19/prices-greggs-sausage-roll-pret-meal-deal-food-inflation-retailers