It is always useful to see what is happening via the Office for National Statistics. Some stats released today surround the food and drink industry, so if you are thinking that eating out (if you are fortunate enough to do so) is getting expensive, or that every time you shop, food prices are rising, here are a few figures that back up your hunch:
UK food prices are rising at the fastest rate in over 40 years. Annual food and non-alcoholic drink Consumer Price Inflation including owner occupiers housing costs (CPIH) was 16.8% in January 2023, down slightly from December 2022 (16.9%).
While rising food and drink prices will affect most households in the UK, they are more likely to disproportionately affect those on low incomes, as they spend a higher proportion of their household budget on food and drink. Higher food and drink prices may lead to some households substituting with cheaper products, reducing consumption of other goods and services or cutting back on food and drink altogether.
Some of it is global. Global commodity price increases, reflecting higher energy prices, supply chain disruption, and the Russian invasion of Ukraine, have contributed to higher input costs for food and drink businesses.
Fuel. The rising cost of energy has increased transportation costs for food and drink across various modes of transport. Higher diesel costs alongside increased global demand following the end of coronavirus (COVID-19) lockdown increased the cost of container shipping during 2021 and into early 2022.
Supply chain problems. On average 34.3% of businesses (excluding microbusinesses) in the manufacture of food and drinks products reported experiencing global supply chain disruption between March 2022 and January 2023.
Food outlets: The extent to which firms can pass on their higher input costs is likely to depend on several factors, such as profit margins, the degree of competition and the scale of price increases. The most common response from food and drink manufacturers was to absorb costs, the second most common response was to pass costs onto customers. Around 8 in 10 (82.2%) food and drink manufacturers reported absorbing some of the increased costs and 69.3% passed the increased costs on to their customers.
For more info see Office for National Statistics (ONS), released 08 March 2023, ONS website, content type, Recent trends in UK food and drink producer and consumer prices: January 2023