The Food and Drink Federation (FDF) has warned that it is becoming "increasing difficult" for food companies to remain competitive amid rising costs due to inflation, labour shortages and government regulation.
The price of food and non-alcoholic drinks has risen 4.3% over the last year, the largest rise in nearly 10 years. However, this runs below headline inflation of 5.5%.
All food and drink categories are more expensive than a year ago: prices of oils and fats are 15.9% higher, with fruit 6.9% higher.
The Bank of England warned this month that consumer price inflation could peak at about 7.25% by April as surging energy prices feed through to consumers.
FDF said that manufacturers are working hard to avoid passing these increases in costs on to consumers through greater efficiency, forward buying and the use of hedging arrangements to protect against currency shifts.
In the FDF’s Food Prices Report published in July 2021, it was predicted that additional costs to industry from UK government regulation will lead to an annual increase of food and drink shopping per household of £160. FDF said that this increase will prove even higher at current inflation rates.
"A challenging time"
Chief executive of the FDF Karen Betts said: “Today's continuing rise in the price of everyday food and drink is worrying - particularly for lower income households. Food and drink manufacturers are working hard to keep prices down but are being hit hard by rising energy, ingredient and logistics costs, which for the moment show no signs of abating, alongside dealing with acute labour shortages.
“It's becoming increasingly difficult for companies - large and small - to remain competitive and upcoming regulation is compounding the situation. This puts a premium on good collaboration between government and industry to guarantee that planned regulation is successful and does not place unnecessary burdens on businesses at an already challenging time.”
This story was originally published on a previous version of the Meat Management website and so there may be some missing images and formatting issues.
