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After 14 months of consecutive rises the annual inflation rate for food and non-alcoholic beverages is estimated to be at its highest since 1980, according to the Office for National Statistics (ONS).
A grim milestone
The sector made the largest upward contribution to month-on-month increases in the Consumer Prices Index (CPI), which rose by 10.1% in the 12 months to September 2022, up from 9.9% in August.
Soaring prices for food and drink were the biggest driver behind the latest cost of living increase, with an annual rise of almost 15%.
Karen Betts, chief executive of industry body Food and Drink Federation, explained, “Today marks a grim milestone with food and drink price inflation hitting 14.5%, according to CPIH data, in September, a level not seen since the 1980s.
“Food and drink manufacturers continue to do everything they can to keep product prices down but huge rises in ingredient, raw material, energy and other costs mean they have no choice but to pass some price rises on.
“Recent economic turbulence in the UK has made a difficult operating environment for businesses in our sector worse. Companies urgently need a stable economic outlook and a coherent policy framework to enable them to make investment and other critical decisions that are central to their businesses and to the prosperity of their local communities.”
The war in Ukraine
This rise is primarily being driven by shortages of essentials such as wheat and oil, due to the war in Ukraine.
In fact, fresh milk saw a 34.5% rise across the 12-month period according to ONS data derived from the Retail Prices Index. Oil and fats were up by 29.1%, butter increased by 27.9%, eggs rose by 23.2%, biscuits and cakes were up 18.8% and bread rose 14.7%.
This is having a negative impact on food producers whose ingredient costs have skyrocketed. As Rupert Ashby, CEO of the British Frozen Food Federation (BFFF) explained, “The new prime minister needs to address the soaring costs being faced by the UK’s food producers or risk many people going hungry this winter.
“There has rightly been a great deal of focus on the rising costs of energy, but less debate about the knock-on effects it is having on businesses that keep the country fed.
“Our members have been hit with a triple whammy of rising costs for ingredients, packaging and transport all of which are driving-up production costs which will have to be passed onto consumers if they are to stay in business.”
This sentiment was also felt by the Federation of Bakers, as CEO Andrew Pyne added, “We would like to see the new prime minister, Rishi Sunak, help mitigate inflationary pressures that are not just hurting households but also the bakery sector.
“We are seeking economic stability and confidence in the energy policy, beyond the current six months, to help bakery businesses plan for the future. It is key that regulatory reforms support the industry and prevent further cost pressures on businesses and households.”
As Rupert concluded, “We have already waited too long whilst the conservatives chose their new leader. We cannot afford further delays or the winter ahead will be one of the most difficult the country has faced in many years.”