UK food manufacturers faced higher prices for their ingredients in August, with ingredients produced in the UK being 17% more expensive (down from 18.4% in July) and imported ingredients are 24.8% dearer (up from 23.9% in July).
The Food and Drink Federation (FDF) said food inflation has continued to rise, now reaching 13.1% which is the second highest figure on record.
Prices rose in double digits for 35 of the 49 main food categories reported in the Office for National Statistics (ONS) with some categories rising to 30%, such as butter (29.5%), whole milk (29.4%), jams and honey (29.1%) or flours and other cereals (28.1%).
In the UK, crops of potatoes, onions, apples, sugar beet and other root vegetables have been impacted by the drought and unfavourable weather conditions.
According to the FDF, the drought in Europe which was judged to be the worst in 500 years, forced animal farmers to use some of their stocks of feed reserved for the winter, as crops became harder to cultivate in extreme heat. It said: “This will bear on the production of animal food products, from meats to diary and eggs.”
Since the drought, the EU’s projections of maize, soybeans and sunflower outputs are now down by more than 10% compared with averages of the previous five years.
A clear focus
Referring to the FAO Food Price Index (FFPI) figures, the FDF said ingredient prices will continue to rise. It said that the recent rises in energy prices, the prospect of global food shortages and higher ingredients prices, might prove an “insurmountable” challenge for many SMEs in our sector.
It added that the support the Prime Minister announced to help households and businesses deal with “soaring” energy bills is “very welcome”; however, the food sector “urgently needs a more detailed conversation with the UK government on the scope of the business energy support scheme.”
It said: “The resilience of the food supply chain has been eroded by successive crises, and real fragilities are now being exposed by soaring inflation.
“A clear focus on ensuring our sector is well-placed to grow out of this crisis is critical – swift measures to simplify regulation, reduce red tape, and boost productivity will be decisive, alongside support with energy costs.”
