The Food and Drink Federation (FDF) has called on the UK Government for more collaboration with industry to help reduce cost burdens on companies.
The Office for National Statistics (ONS) has released its latest cost of living figures, reporting a 4.3% decrease in the rate of inflation from the peak in March. The rate of inflation was 14.9%, down from 17.4% in the year to June 2023 and a peak of 19.2% in March, which was the highest annual food inflation rate in over 45 years.
A survey conducted by ONS over the period 8th February to 1st May 2023 showed that rising food costs was the most commonly reported reason among the 56% of adults who said their cost of living had risen compared with a month ago, with 97% of those saying that higher food shopping prices was one of the reasons for their rising costs.
High production costs impact the rate of inflation
A spokesperson for the FDF said: “It’s encouraging to see food and drink price inflation falling again this month to 14.9% from its peak in March. We expect the rate of food and drink price inflation will continue to fall over the coming months, offering households some relief from the rapidly rising prices of recent months. However, after three years of cost increases in all elements of the production process, high ingredient costs, labour shortages continue to have a significant impact on the cost of food production in the UK.
“Food manufacturers are doing all they can to keep price rises to a minimum, making savings wherever possible, while paying a fair price to their suppliers. But the impact on our sector is clear, with insolvencies on the rise particularly among smaller businesses, investments paused and vacancies running much higher than any other manufacturing sector – all of which is having a negative impact on future growth.
“Government needs to continue to work with us to mitigate these issues, simplify and revisit forthcoming regulation on borders, labelling and recycling, to help reduce unnecessary cost burdens for businesses, and create conditions for growth.”
The full ONS cost of living insights can be found here.
