The Food and Drink Federation (FDF) is sounding the alarm on UK government policies as grocery prices keep rising. They’ve upped their inflation forecast to 5.7% for December, a significant jump from their previous estimate of 4.8%. According to the FDF, manufacturers are struggling under the weight of these government policies, which are driving up costs.
Recent figures are expected from the Office for National Statistics, and many are watching closely for signs of further inflation in food and non-alcoholic drinks. In July, inflation for these items hit 4.9%, the highest rate since February 2022. While this is down from a staggering 19.2% in March 2023—the highest in over 45 years—the FDF is still cautious.
Since early 2020, food and soft drink prices have risen by 37%. This increase is greater than the wider economy’s 28% rise. The sharpest jumps are in everyday items like milk, cheese, eggs, and cooking oils. Dr. Liliana Danila, the chief economist at the FDF, points out that inflation surged from 2020 to 2023 due to geopolitical issues that disrupted supply chains and drove up energy costs. Now, she argues, the new spike is largely due to domestic factors.
The FDF blames several government actions, including higher employer national insurance contributions and new taxes on packaging, which they say are costing the food and drink sector around £410 million to £1.1 billion annually. Over the past three years, agricultural commodity prices have jumped by 51%, while gas prices in the UK have quadrupled. Despite some costs stabilizing, food and drink inflation is expected to stay well above average through 2025.
Karen Betts, CEO of the FDF, adds that UK food inflation stands out negatively compared to other European countries. She notes that companies can no longer absorb rising costs without passing some to consumers. With the upcoming autumn Budget, she urges the government to avoid adding more regulatory costs that could worsen the situation.
Adding to the discussion, a recent survey found that 68% of consumers are aware of rising food prices and express concern about their ability to maintain their grocery budgets. Many are turning to discount supermarkets or bulk buying to save money.
Overall, the FDF suggests that the government should work with the food and drink industry to foster investment and skill development, helping the sector grow and adapt.
For more information, check official insights from the Food and Drink Federation here.
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government policies, FDF, soft drinks, food inflation, UK food, inflation, food, government
