More than three quarters of manufacturers expect input prices to rise during the remainder of 2018, according to a survey from the Food and Drink Federation (FDF).
More than half of those polled had seen increased ingredient costs (62%), increased packaging costs (61%) and increased energy costs (51%) having the biggest impact on their businesses in the second quarter of the year.
Positively, 54% of businesses have reported they have also seen an increase in sales in the UK, while 42% reported an increase in new product launches.
The UK’s future relationship with the EU was amongst the top three concerns of businesses polled.
Increases in input prices were expected to continue in part due to exchange rate volatility.
Despite this, respondents felt general business confidence had remained static during the last two quarters (66%).
Looking ahead to the second half of the year, many companies said they were still planning to invest, with investment in new machinery and product launches being two of the three opportunities identified by those FDF spoke to.
FDF chief executive Ian Wright CBE said: “The shadow of a ‘no deal’ Brexit looms large over business confidence amongst the UK’s food and drink manufacturing industry. This should be no surprise: there are so many crucial questions to which businesses need answers.”
Wright concluded that it is encouraging to see so much future investment planned, and is urging the Government to start providing the clarity needed to navigate unchartered waters.