Food and Drink Federation’s fears over soaring inflation levels, as Prime Minister Liz Truss resigns

Pic: Liz Truss has resigned as UK Prime Minister after 44 days, with industry concerned over near-record levels of inflation. Pic: Shutterstock

The UK’s Food and Drink Federation has expressed its concerns over near-record levels of sector inflation, amid Prime Minister Liz Truss’s decision yesterday to stand down after only 44 days in post, reports Neill Barston.

Karen Betts, the organisation’s chief executive, spoke out surrounding the British leader’s decision to resign following weeks of severe economic and political turbulence caused by a mini budget unveiled by former chancellor Kwasi Kwarteng.

The CEO said: “Food and drink manufacturers across the country are facing the toughest trading conditions anyone can remember, as they grapple with keeping food affordable for households amid soaring inflation. A new Prime Minister must bring stability, not least in economic and energy policy, so businesses can make sensible plans in hugely difficult circumstances and play their part in managing inflation.

“A new government must also focus on regulatory reform, where there remains a good deal of scope to streamline red tape and stop avoidable costs being imposed on businesses and shoppers when they can least afford it,” added the FDF’s leader, in the wake of notably high level of inflation – which are this week standing at near record levels last experience in 1980.

As the FDF has acknowledged, Food and drink manufacturers, including many of its own members in the confectionery and snacks manufacturing trade, faced higher prices for their ingredients, with food ingredients produced in the UK being 16.7% more expensive (down from 17.2%, revised, in August) and imported ingredients 27.8% costlier (up from 25.6%, revised, in August).

Furthermore, according to the FDF, goods leaving the manufacturers’ facilities—output gate prices, saw inflation inching up to 14.8% (up from 14.5%, revised, in August), which will in effect mean that prises will continue to rise well into 2023.

Significantly, the organisation also highlighted the fact that imported ingredients prices have risen by almost 30% compared to a year ago, with ingredients for items within the confectionery and chocolate sector have also been impacted. This has been additionally impacted as imports from non-EU countries are typically traded in dollars – which has worked against the UK with Sterling having depreciated against the value of the US currency since the start of 2022.

In addition, the FDF noted that some manufacturers are hedging against currency volatility and contracting their purchases of imports, effectively locking in prices for a period of time, though this is only seen as a temporary measure.

The organisation added that ‘crippling energy costs and labour shortages’ were creating an equal major headache for the industry, and the volatility of the UK currency had added to the sector’s concerns considerably amid wider global economic and geopolitical turbulence.




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