Photo: Liz Truss has resigned as UK Prime Minister after 44 days, with industry worried about near-record inflation levels. Photo: Shutterstock
The UK Food and Drink Federation has expressed its concerns about near-record inflation levels in the sector, amid Prime Minister Liz Truss’ decision yesterday to step down after just 44 days in office, Neill Barston reports.
Karen Betts, chief executive of the organisation, spoke about the British leader’s decision to resign following weeks of serious economic and political upheaval caused by a small budget unveiled by former chancellor Kwasi Kwarteng.
The CEO said: “Food and drink producers across the country are facing the toughest trading conditions anyone can remember, as they struggle to keep food affordable for households amid rising inflation. A new Prime Minister must bring stability, especially in economic and energy policy, so that businesses can make sensible plans under extremely difficult circumstances and play their part in controlling inflation.
“The new government must also focus on regulatory reform, where there is still much room to simplify bureaucracy and prevent avoidable costs being imposed on businesses and shoppers when they can least afford it,” added the FDF leader, in the result of a particularly high level of inflation – which this week is at the highest levels since their last experience in 1980.
As the FDF has acknowledged, food and drink manufacturers, including many of their own members in the confectionery and snack manufacturing trade, faced higher prices for their ingredients, with food ingredients produced in the UK up 16.7% more expensive (down by 17.2%, revised, in August) and imported ingredients 27.8% more expensive (up by 25.6%, revised, in August).
Furthermore, according to the FDF, goods that left the manufacturers’ facilities – output gate prices saw inflation increase to 14.8% (up from 14.5%, revised, in August), which will effectively mean the prices will continue to rise well into the future. 2023.
Significantly, the organization also drew attention to the fact that the prices of imported ingredients have risen by almost 30% compared to a year ago, with ingredients for items within the sweets and chocolate sector also being affected. This has also been affected as imports from countries outside the EU are usually traded in dollars – which has worked against the UK with Sterling depreciating against the value of the US currency since early 2022.
In addition, the FDF noted that some manufacturers are hedging against currency volatility and contracting their purchases from imports, effectively locking in prices for a period of time, although this is only a temporary measure.
The organization added that ‘overwhelming energy costs and labor shortages’ were creating an equal headache for the industry, and the volatility of the UK currency had added significantly to the sector’s concerns amid wider global economic and geopolitical turmoil.