CBI survey: Cost inflation hits UK food and drink

By Anne Bruce

- Last updated on GMT

Related tags: Manufacturing, Industry, Cbi

Cridland: "Production costs have jumped markedly"
Cridland: "Production costs have jumped markedly"
Most food and drink manufacturers were working below capacity in the last quarter, according to a new survey from the Confederation of British Industry (CBI).

Some 61% of respondents in the sector told the CBI’s April Industrial Trends Survey that they were working below a satisfactory full rate of operation.

The survey also pointed to increased cost of unit of output, with 79% saying costs had risen in the last quarter, and no-one saying that they had gone down. Some 76% said costs were going to be up again in the current quarter, and 22% that they would stay the same.

The survey also suggests that 34% of manufacturers thought volumes on their domestic order book, excluding seasonal variations, were below normal, and 29% above normal.

Stronger exports

But exports were in good shape for the quarter to April 11, with only 3% saying they were below normal and 89% normal, according to the survey.

Some 33% of the sample surveyed said that their staff numbers were down in the quarter to April 11, and 45% said that they were static. The trend for the current quarter was that 60% expected staff numbers to be static and 18% down.

In all, a sample of 25 food and drink manufacturers and a total of 451 manufacturers across all manufacturing sectors responded to the CBI survey.

Manufacturing sector on track for recovery

The manufacturing sector’s recovery is firmly on track and that looks set to continue, the CBI said, following publication of its report.

A balance of +53% said average unit costs had gone up, the highest since October 2008 (+56%), and a further acceleration on significant cost rises already experienced over the past year.

John Cridland, CBI director-general, said: “Production costs have jumped markedly​ during the last three months, rocketing ahead after a full year of already rapid cost inflation. This is unsurprising given the recent surge in oil and other commodity prices.”

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