Are food prices rising and what's the impact of this? 15/11/17
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We've all started to hear about the impact of BREXIT on food prices but working within the food industry, Simply Lunch has started to hear more and more about the increasing cost of food and ingredients, so we thought it would be useful to share our current knowledge.
It may be that “the main impact of BREXIT, thus far, has been a ‘psychological’ one, i.e. persuading currency traders that sterling will lose value in the longer-term. This has driven a drop in the value of the pound, which has pushed up prices for imported goods.” -Chris Horseman, Informa Agribusiness Intelligence, Food Manufacture Newsletter
So what’s actually happening?
Reports have started coming through confirming that prices of different ingredients have been increasing. ONS have confirmed that between July 2016 and July 2017 fish increased by 16%, meat by 17% and dairy by 13%. Furthermore, fruit and veg input costs have increased by 8.2% and bakery costs by 12.8%. That may not sound much but for larger businesses this does have a significant financial implication if many of these goods are being used in food production and even small businesses may notice these differences with smaller profits to consider.
The Food & Drinks Federation have said that food prices are at their highest levels since 2013 and as an example, butter is in fact twice as high in price as it was last year. This all indicates that businesses within the food industry will feel the squeeze in the months ahead.
How does this affect me?
If you run a business within the food industry, you may have to think about considering stricter portion controls. In fact, 12% of UK caterers have said that they will be forced to do this (Nisbet’s Pulse Survey).
36% of UK caterers have further suggested that price increases will unfortunately have to be passed onto customers (Nisbet’s Pulse Survey) so it looks like customers may start to see their regular food purchases marginally increase soon. Greggs has even had to put up the price of their humble sausage roll by 5p in October 2017.
It may not all be bad news however as catering industry professionals strongly suggest that healthy eating and locally sourced products will be a key driver for customers purchasing goods (Nisbet’s Pulse Survey) so perhaps this is what businesses within the industry should be focusing on instead.
The future of food
There are many factors that affect ingredient and food prices. BREXIT may well have an impact on the food industry over the coming months but it will also be affected by other variables such as the weather and number of animals so it may be harder than we think to predict what impact there will definitively be on food prices going forward (Chris Horseman, Informa Agribusiness Intelligence, Food Manufacture Newsletter). The likelihood is though that businesses and consumers will both be affected by these variables in the near future.
-Sophie Simpson, Account Manager, Simply Lunch
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