A report by the Food and Drink Federation (FDF) predicts that consumers will inevitably face higher food and drink prices over the next few years, due to the costs of impending Government regulations.
If the cost of forthcoming government policies were passed on directly to consumers, the FDF stated that it would increase the price of food and drink shopping per household by more than £160 per year.
The report found, with no margin left to offset the raft of government policies coming down the line, manufacturers will have to pass the cost of raw materials directly on to consumers.
According to the FDF, over the last twenty years, food and drink manufacturers have worked tirelessly to absorb increases in the cost of raw materials, while ensuring the impact of these price pressures are not passed directly onto consumers.
The FDF calculates that the cost to the food and drink industry of proposed UK Government policies around public health and sustainability is at least £8 billion. This is before factoring in the suggested taxes on salt and sugar as outlined in Henry Dimbleby’s recent National Food Strategy report. These additional costs from Government policies also come at a time of rising global inflationary pressures.
The policies include:
- the reforming of Extended Producer responsibility for the disposal of post-consumer goods (£1.7 billion)
- a Deposit Return Scheme on food and drink packaging (£850 million)
- the introduction of promotional restrictions on HFSS foods (£833 million).
Ian Wright CBE, chief executive of the Food and Drink Federation, stated: “Food and drink manufacturers are close to breaking point.” Wright continued, “They face a combination of challenges which threaten to deliver food price inflation to already hard-pressed households.”
Wright acknowledged the plan’s need to address the pressing concerns of sustainability and obesity. Wright also called on the Government to reconsider the changes it is demanding and the impact it would have on the cost of household food and drink shopping.
Wright continued: “The suggestion that we should introduce further food taxes at this time is madness. It is an insult to the hardworking families of this country to be told what to do by those who can’t begin to imagine how tough the last year has been.” He went on to say, “Double digit percentage increases in food expenditure for the poorest households are highly likely in the coming years unless the Government pauses to consider the consequences of its plans.”
The FDF is calling on the British Government to reconsider these policies and their unintended consequences, as well as fundamental reforms to the UK’s regulatory architecture, in order to ensure future policy is effective and well-targeted.