The UK’s Food and Drink Federation has expressed ongoing concern at product price rises, despite latest monthly results revealing overall figures stabilising at 1.3% inflation, writes Neill Barston.

As previously reported, chocolate has remained one of the hardest-hit categories, with statistics from June showing that the category experienced retail price hikes of over 17%, which in turn has impacted sales of premium ranges, amid household budget constraints.

However, according to the FDF, inflation in the chocolate category was now evening out, with figures down 0.7%, indicating some price correction – with many brands and retailers preparing for peak Halloween and Christmas confectionery and snacks sales.

The latest figures come as UK government inflation figures are released, with the rate officially standing at 3.1%, against longstanding targets of 2%, though ‘real inflation’ within many wider categories, including for the retail sector, being notably higher.

In the case of chocolate and wider snacking categories, the industry remains impacted by ingredients supply chains, with cocoa price volatility remaining a factor, despite futures markets falling from a peak of $12,000 at the start of last year, to around $5,000 a tonne this year.

Consequently, major supplier companies including Nestle and Barry Callebaut, as well as brands including Lindt, have moved to pass on those costs to consumers, amid declines in sales volumes.

Commenting on the latest figures, Dr Liliana Danila, Chief Economist, The Food and Drink Federation (FDF), expressed concern at the overall picture.

She said: “There’s no doubt that the cost of producing food in the UK is rising. On top of mounting regulatory pressures, input costs are rising across the board. Diesel prices are up two fifths and petrol around a third, while gas prices have more than doubled since February and the UK’s industrial electricity prices remain the highest in Europe. Packaging and ingredient costs are also rising. We expect that these increases will start to appear in consumer prices into next year.

“As manufacturers and retailers strive to keep prices as low as possible for consumers, especially in the lead up to Christmas, the pressure is building for the sector, undermining investment in the long-term resilience of the UK food system. Government should be doing what it can now to take the heat out of any later inflationary period and safeguard the UK’s food and drink sector. To start, with the Budget fast approaching, they should prioritise extending targeted energy relief to the food and drink sector.” adding that food and drink has s a direct impact on household budgets, and urged the government to offer equivalent support extended to other market segments including manufacturing, in a bid to ease cost of living pressures.