Businesses ‘not out of the storm yet’ on inflation, FDF warns
Food and drink prices have dropped by 0.1 of a percentage point, from 16.9% in December to 16.8% in January, with inflation now showing promising signs of peaking. However, the Food and Drink Federation (FDF) has warned that businesses are not out of the storm yet.
Food and drink prices rose by 16.8% in January, a slight easing on December’s 16.9% and above UK’s CPI inflation of 10.1%. This is the first time in eighteen months that annual food and drink inflation is easing. On the month, prices continued to rise by 0.6%.
Of the 49 main food categories reported in the latest figures from Office for National Statistics, only eight recorded inflation in single-digits. Amongst the recorded categories, poultry saw price rises of 18.5%, with beef and veal and pork seeing price increases of 14.7% and 16.8%, respectively.
Chief executive of the FDF, Karen Betts said that food and drink inflation remains “worryingly high”, but added that it is encouraging to see signs that it’s starting to peak.
She said: “Our industry can see the pressure that rising prices are putting on everyone’s weekly shop, and companies are trying their absolute best to limit price rises for shoppers. However, with food and drink companies’ average production costs rising 21% in the past year, some price rises are having to be passed on in order for companies to remain afloat. The pressure on our sector is such that all the evidence now points to double the number of food and drink companies going out of business in 2022 as was the case in 2019.
“The Chancellor can support us as we continue to face into inflationary headwinds in next month’s Budget, including by incentivising companies to invest while trading is so tough, reforming the Apprenticeship Levy and by ensuring new regulations on plastics and packaging both drive up recycling and drive down prices.”