The Food and Drink Federation’s (FDF) Q1 Business Confidence Survey showed that just over half (55%) of respondents believed that general business conditions remained the same as in the fourth quarter of 2017.
Over a quarter (27%) said that general conditions had deteriorated, while 18% had seen business conditions improve.
More troublingly, 66% expected input prices to increase in 2018 while 52% predicted a rise in Consumer Price Inflation during the year.
Analysing key impacts on food and drink businesses in 2018, 77% reported increased packaging costs, 72% reported increased ingredient costs and just over half (52%) saw energy costs rise.
Looking ahead, businesses earmarked the potential for increased domestic demand, investment in NPD and the growing clamour for healthy foods as opportunities this year. On the negative side, increased ingredient costs, exchange rate volatility and the UK/EU situation were cited as risks in 2018.
Ian Wright, FDF chief executive, said: “It is encouraging to see that business conditions for the food and drink industry have remained stable.
“It is not surprising that the industry is fearful over the uncertainty that surrounds a post-Brexit UK-EU relationship, and the results rightly reflect this as a barrier for business in the coming year.
“Despite the woes of Brexit, it is great to see that food and drink businesses have found hope in the ever-expanding demand for healthier food products.”
Earlier this month, a House of Lords sub-committee report predicted that food prices would rise post-Brexit if the right trade deals were not agreed before the UK leaves the EU.