The UK’s Food and Drink Federation organisation has welcomed latest inflation figures for the sector dropping to 1.6% – while confectionery remains triple that level, at 6.4%, and among the highest in the industry, reports Neill Barston.

As Confectionery Production has previously covered, the sweets and snacks sector in the region has been significantly impacted over the past couple of years, with retail pricing reportedly hitting consumers with costs up to 20% above the prior year.

Manufacturers have cited a combination of higher energy costs, ingredients becoming harder and more expensive to secure, and challenges within supply chains that have all created further issues.

As we have previously covered, the cocoa market has been especially affected, with peak prices seen in 2024 topping out at around $12,000 a tonne at the start of last year, dropping by two thirds in the space of several months, and now heading upwards again to around the $5,000 mark, leaving supply chains in a state of uncertainty.

While food inflation has seemingly come down in general, there have been further issues faced by the confectionery, snacks and bakery sectors that have notable financial impact in the form of additional Brexit-related red tape – which has made exporting to potential continental customers increasingly non-viable for many operating within the industry.

The UK government’s own inflation target is set at 2%, with confectionery experiencing three times that level, which has caused concern among consumer groups.

Despite such factors, the FDF believed the overall trend for reducing inflation was to be welcomed, with some product prices in other segments falling, while there were even higher rises for fish (9% inflation), preserved fruit (8%), and water (up 8%), which has caused market concern as shoppers seek to rein in their spending amid elevated grocery costs.

Dr Liliana Danila, Chief Economist, The Food and Drink Federation (FDF), commented: “It’s positive to see food and drink manufacturers managing to keep food prices stable in the face of rising input costs.

“What’s become clear is that food manufacturers have worked hard since Russia’s invasion of Ukraine to diversify their supply chains and shore up their resilience against further major supply shocks. We continue to anticipate rising food price inflation as the year goes on, however this is likely to be lower, come later and plateau for longer than the previous inflationary cycle.

“With disruption the new norm for the food system, it’s critical that the new Prime Minister takes food security seriously and is ready to work in partnership with industry to ensure our food system is investing for growth and resilience, from vital tech adoption to future-facing skills.”