Food ingredients cost ‘may rise after Brexit’

By Matt Atherton

- Last updated on GMT

Meat input prices increased 17% since June 2016
Meat input prices increased 17% since June 2016

Related tags European union Eu

Food ingredient prices could continue rising if Britain quits the EU, according to data specialist Informa Agribusiness Intelligence, after the Office for National Statistics (ONS) confirmed another round of increases over the past year.

Informa Agribusiness Intelligence’s Chris Horseman told “If, and when, the UK leaves the Single Market, it is quite possible that prices of imports from Europe will rise.

“This would happen if there were tariff barriers to be overcome, or ​[more likely] non-tariff bureaucratic obstacles at the border, which would disrupt supply chains and make suppliers tend to favour UK supplies.

“If it did happen​ [staying in the Single Market], prices would simply avoid the policy shocks which would otherwise await them if Britain did leave the Single Market ​[and thus also the Customs Union]. The deeper Britain’s future integration with the EU is after Brexit, the less pronounced this effect will be.”

‘Policy shocks’

But, supply issues, weather and currency fluctuation were more likely to have an impact on price than any Brexit-related cause in the short to medium-term, said Horseman.

“The main impact of Brexit, thus far, has been a ‘psychological’ one, ie 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.

“A political crisis may have the effect of further deflating sterling and further pushing up prices for imported goods such as rice. But,​ again, market fundamentals – notably weather and animal numbers respectively – are rather more likely to have an impact on the price of wheat and meat in the short to medium-term.”

His comments followed ONS confirmation that ingredient prices for meat, fish and dairy products had risen by 17%, 16% and 13% respectively, over the past 12 months.

Input costs increased

All food manufacturing input costs increased (see charts below), except vegetable, animal oils and fats, since June last year – when the EU referendum took place. Fruit and vegetable costs have increased 8.2%, and bakery product costs rose 12.8%, the ONS data showed.

This month alone, meat costs increased 1.1%, and fruit and vegetable costs rose 0.9%.

Dairy costs also increased 0.7% this month; on top of the 3% rise last month.

The data came after Arla Foods chief executive Peder Tuborgh warned that butter and cream prices​ would continue to rise until Christmas. Dairy prices rose because there wasn’t enough being produced, Tuborgh said.

Meanwhile, dairy processor Dairy Crest said that costs rose “substantially”​ over the past three months.

Food manufacturing input price inflation since June 2016 – at a glance

  • Meat input costs up 17.3%
  • Dairy input costs up 13.4%
  • Fish input costs up 15.4%
  • Bakery product input costs up 12.8%
  • Fruit and vegetable input costs up 17.3%

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